Transcript Document 7217398

Deutsche Beteiligungs AG –
Opportunity to invest
German Mid Cap Conference
Frankfurt am Main, November 26, 2003
Contents
 Overview
 Investment strategy in German speaking countries
 Investments abroad
 Fund management
 Financial year 2002/2003 – Investments and
disinvestments
 Deutsche Beteiligungs AG – A good investment
opportunity
 Annex
Overview
MBO
Intern. activities
Fund management
Fiscal year 2002/03
Summary
Annex
2
Deutsche Beteiligungs AG Overview
 40 years of private equity experience
- More than 300 German mid-market transactions
 Remarkable success story
- 16.3 % return on equity (p.a., 1992/93 to 2001/02)
 Good market position
- Capital requirements for further investments
 Listed since 1985
- 3 principal investors (45 %)
- Free float 49.92 %
- Market capitalization ~ €170 mn
Overview
MBO
Intern. activities
Fund management
Fiscal year 2002/03
Summary
Annex
3
Business activities
 Focus on management buyouts
- Direct buyout investments in German-speaking countries
- Foreign buyout investments through experienced fund
partners
- Growth financings (minority investments) in exceptional
cases only
40.5 %
21.7 %
37.8 %
 Fund management
- Fee income for cost coverage
- Access to larger transactions through additional financings
(“parallel funds”)
Overview
MBO
Intern. activities
Fund management
Fiscal year 2002/03
Summary
Annex
4
Well-balanced portfolio
Trade
Other
Consumer
goods
Industrial
services and
logistics
Plant and
machine
construction
Automotive
supplies
Building
Industry
Chemicals
Print, media,
packaging
Status: Acquisition costs, Date:
October 31, 2003
Overview
MBO
Intern. activities
Fund management
Fiscal year 2002/03
Summary
Annex
5
Focus on MBOs –
Investment criteria
 Mid-market businesses / Group subsidiaries
- Old economy industry, industrial service sectors
- Turnover up to €750 mn p.a.
- Proven management
 Leading market position
 Profitable, with growth potential
 Transaction value €50 – 250 mn
Overview
MBO
Intern. activities
Fund management
Fiscal year 2002/03
Summary
Annex
6
Case study Casco: How Deutsche
Beteiligungs AG builds value
 Company
- World market leader in the development, manufacture and
marketing of impregnated foils and other surface materials for
floorings, furniture, and construction industry
- Sales (2002) €265 mn
928 employees in eight countries
 Investment
- Management buyout led by Deutsche Beteiligungs AG, jointly
with US-Partner
- Investment €12.4 mn
Overview
MBO
Intern. activities
Fund management
Fiscal year 2002/03
Summary
Annex
7
Casco Surfaces GmbH
 Build value through
- Internal growth potential
- Development of new markets (Brazil, South East Asia)
- Launch of new, high-margin products
- Earnings enhancement by optimizing product mix and improving
cost structure in Europe (site optimization)
 Exit opportunities
- Trade sale to buyer, in whose process chain Casco fits
- IPO
Overview
MBO
Intern. activities
Fund management
Fiscal year 2002/03
Summary
Annex
8
Case Study Sebaldus: How Deutsche
Beteiligungs AG built value
 Company
Major German media business, four categories: Publishing, Printing,
Direct Marketing, Electronic Media
Turnover (1997) €476 mn, 3,700 employees
 Outset
Increasing competition, market position attacked
-
Group of 196 shareholders with different objectives
-
No capital for growth
 Investment
MBO in August 1997 (jointly with other finance investors)
Investment €16.7 mn
Overview
MBO
Intern. activities
Fund management
Fiscal year 2002/03
Summary
Annex
9
Sebaldus AG
 Growth in value through focus on core businesses
- Core business Printing:
- add-on acquisition
- new printing press
- Core business Publishing:
- acquisition of majority in Austrian publisher Metro
- IPO for Computec Media AG
- Business field Electronic Media sold
 Exit
- Printing and Direct Marketing activities sold to Schlott AG in December
1999
- Publishing activities sold to WAZ Group in November 2000
 Invested capital tripled
Overview
MBO
Intern. activities
Fund management
Fiscal year 2002/03
Summary
Annex
10
Experienced investment team
average yrs. of private-equity experience
at DBAG
4
7
10
Principals
Directors
Investment Managers
> 12
>8
>5
 Management remuneration with strong incentive
system
- Carried-interest scheme installed in 2001
- Investment team must co-invest to profit from performance of
investments
Overview
MBO
Intern. activities
Fund management
Fiscal year 2002/03
Summary
Annex
11
Three out of four German deals
through proprietary channels
Investments in Germanspeaking countries 19962003 (24)
 Excellent network
provides
proprietary deal
access
- Avoids costly auction
bids
- Greater deal
probability
3
3
5
DBAG Partners
Deutsche Bank
Executive Circle
Overview
MBO
Intern. activities
3
Fund management
Fiscal year 2002/03
4
6
Direct contacts
M&A Advisors
Portfolio
Summary
Annex
12
Deal activity Germany –
transaction value € 50 – 250 mn
2.000
16
15
1.800
14
13
10
12
1.600
12
11
1.400
12
10
10
1.200
mn € 1.000
8
6
800
6
5
600
4
3
400
2
2
200
2
0
0
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003*
Deutsche Beteiligungs AG…
Value (mn €)
Number
* Jan. to Oct.
… 2002 involved in the completion of two transactions,
… 2003 in the completion of three transactions
Overview
MBO
Intern. activities
Fund management
Fiscal year 2002/03
Summary
Annex
13
Growth drivers for mid-market
deals
 Key growth driver:
Spin-offs of non-core activities by large
corporations
 Other growth drivers:
- Regulatory pressure on banks to cut back on lending (Basel II)
- Succession issue for family-owned companies
 Positive mid-market development
Overview
MBO
Intern. activities
Fund management
Fiscal year 2002/03
Summary
Annex
14
Portfolio diversification through
international investments
 Fund partnerships benefit business in German
speaking countries
- Cross-border deals (Casco Surfaces)
- Additionally: Portfolio diversification
 Comparable investment criteria
 Collaboration with experienced partners
- USA: Harvest Partners
- Austria: Unternehmens Invest AG (UIAG)
- France: Quartus Gestion
Overview
MBO
Intern. activities
Fund management
Fiscal year 2002/03
Summary
Annex
15
New equity financing - Investors
confide in the team
Deutsche Beteiligungs AG
Fund I & II
Fund III
Fund IV
2002
1998
 Fund IV: €228 mn committed – largest equity-raising
program to date
 Fee income for cost coverage
 Investment ratio Deutsche Beteiligungs AG / DBAG Fund IV
1:2
Overview
MBO
Intern. activities
Fund management
Fiscal year 2002/03
Summary
Annex
16
Financial year 2002/2003 – Difficult
environment
 Exit markets remain difficult
- Strategic investors (trade sales) restrained
- Financial investors a stable pillar
- IPOs not possible
 No economic growth
- Challenge for portfolio companies
 But: Attractive investment opportunities
- Restructuring of "Deutschland AG" (Corporate Germany)
- Capital markets pressuring large conglomerates
 Invest anticyclically
Overview
MBO
Intern. activities
Fund management
Fiscal year 2002/03
Summary
Annex
17
Profitable exits despite market
weakness
 Edscha AG – Secondary Buyout
Investment: October 2000
Exit: November 2002 – IRR: > 25 % p.a.
 Andritz AG – Secondary Placement
Investment: December 1999
Exit (82 %): June 2003 – IRR: invested capital doubled, > 20 % p.a.
 Global Power Equipment Group Inc. – Stock
Exchange
Investment: August 2000
Exit (> 50 %): July 2003 – IRR: invested capital doubled, > 20 % p.a.
 Value growth realized
Overview
MBO
Intern. activities
Fund management
Fiscal year 2002/03
Summary
Annex
18
Financial year 2002/2003 – Ninemonths’ results
 Balanced quarterly result
- Sales proceeds largely consumed by valuation adjustments
- Weak US economy
=> Valuation adjustments on three portfolio companies and one
fund investment
- Other operating income significantly above previous year's level
- Management fees
- Structuring fees
- Appreciation in value
 Outlook: Balanced total result
- Significant improvement vs. previous year
Overview
MBO
Intern. activities
Fund management
Fiscal year 2002/03
Summary
Annex
19
Recent investments
 Casco Surfaces – Management buyout
Invested in July 2003
Chemicals – Investment €12.4 mn
 Preh-Werke – Management buyout
Invested in November 2003
Automotive supplier – Investment €12.8 mn
 BBS – Management buyout
Invested in November 2003
Industrial services – Investment €10.0 mn
 Strong market position
Overview
MBO
Intern. activities
Fund management
Fiscal year 2002/03
Summary
Annex
20
Shareholder profile
Deutsche Bank AG
15 %
Gerling Group
15 %
Free Float
49.92 %
Vermögensverwaltung Wilhelm
von Finck
15 %
Kreissparkasse Biberach
5.08 %
 S-Dax indexed
 Free float enlarged to 49.92 %
- Market capitalization of free float ~ €84mn
Overview
MBO
Intern. activities
Fund management
Fiscal year 2002/03
Summary
Annex
21
Share price
14
12
10
8
euros
6
DBAG
Dax (indexed)
S-Dax (indexed)
4
2
0
1.11.02
Overview
1.1.03
MBO
1.3.03
Intern. activities
1.5.03
Fund management
1.7.03
1.9.03
Fiscal year 2002/03
Summary
1.11.03
Annex
22
Shares trade at book-value level
50
45
40
35
Equity per Share
Share Price
30
in € 25
20
15
10
5
0
Dec- Dec- Dec- Dec- Dec- Dec- Dec- Dec- Dec- Dec- Dec- Dec- Dec- Dec- Dec- Dec- Dec- Dec85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02
Overview
MBO
Intern. activities
Fund management
Fiscal year 2002/03
Summary
Annex
23
Private equity outperforms other
asset classes
 Private equity returns
over 10-year period: 15
percent
Base: 196 European buyout funds,
Horizon IRR 1993 to 2002
 Private equity returns
higher than other asset
classes
16.3%
14.8%
16.0%
12.0%
8.0%
6.0%
7.0%
4.0%
0.0%
Deutsche Beteiligungs AG
Private equity
European stocks
Fixed-interest bearing
securities
Source: Pan-European Performance Study, EVCA, March 2003
Overview
MBO
Intern. activities
Fund management
Fiscal year 2002/03
Summary
Annex
24
Deutsche Beteiligungs AG –
a good investment opportunity
 Long-established brand name
- Deutsche Beteiligungs AG founded in 1965
 Track record
- av. pre-tax 1 year
ROE p.a.
- 9.3 %
3 years
7.4 %
5 years
18.2 %
10 years 16.3 %
 Diversification
- Broad, balanced portfolio of assets
 Experience
- … in managing economic and market cycles
- Ability to realize exits
- Benefit of network – access to deal flow
- Disciplined investment process
Overview
MBO
Intern. activities
Fund management
Fiscal year 2002/03
Summary
Annex
25
Annex
Valuation rules of
International Accounting Standards
 Valuation principles based on IAS rules
 Valuation based on
- Stock market prices
- Purchase offers
- Comparable transactions
- Multiples method (e.g. peer group comparisons)
- ”Sum of the Parts“ assessment
Overview
MBO
Intern. activities
Fund management
Fiscal year 2002/03
Summary
Annex
27
Shareholders’ equity
Total shareholders' equity (net of dividend)
200
173
180
172
156
156
Oct. 31,
2002
Jul. 31,
2003
160
140
120
mn euros 100
108
92
80
60
40
20
0
Oct. 31,
1998
Overview
MBO
Intern. activities
Oct. 31,
1999
Oct. 31,
2000
Fund management
Oct. 31,
2001
Fiscal year 2002/03
Summary
Annex
28
Investments
Investments (cost or lower)
350
291
300
270
252
259
231
250
211
200
mn euros
150
100
50
0
Oct. 31,
1998
Overview
MBO
Intern. activities
Oct. 31,
1999
Oct. 31,
2000
Fund management
Oct. 31,
2001
Oct. 31,
2002
Fiscal year 2002/03
Jul. 31,
2003
Summary
Annex
29
Result from investment activity
Result from investment activity *
70
61
60
55
51
50
40
mn euros
28
30
19
20
17
10
0
**
1197/98 1998/99 1999/00 2000/01 2001/02 2002/03
Consolidated as of FY 2001/02
* Before write-offs and provisions
** First 3 quarters
Overview
MBO
Intern. activities
Fund management
Fiscal year 2002/03
Summary
Annex
30
Net income/loss
Net income/loss
50
38
40
32
30
21
20
mn euros
9
10
0
0
1997/98
1998/99
1999/00
-10
2000/01* 2001/02* 2002/03
(3rd qrt.) *
-20
-16
* consolidated
Overview
MBO
Intern. activities
Fund management
Fiscal year 2002/03
Summary
Annex
31
Typical investment structure
Target company
10 %
30 %
60 %
: 2
Deutsche 1
Beteiligungs AG
DBAG Fund IV
Management of target
company
Overview
MBO
Intern. activities
1 % investment by
carry team of
Deutsche Beteiligungs AG
Fund management
Fiscal year 2002/03
Summary
Annex
32
Ten largest investments represent
61 % of book value
Date of
Company
mn €
Sector
Bauer AG
09/96
27.6 Special construction
Lignum Technologie AG
01/97
22.6 Wood processing machinery
schlott gruppe AG
12/99
17.4 Media systems provider
Harvest Partners Intl. III
10/97
16.7 US fund
Hörmann KG
05/97
13.7 Industrial services
Harvest Partners Intl. IV
04/01
12.6 US fund
Casco Surfaces GmbH
07/03
12.4 Basic materials
AKsys GmbH
12/01
12.1 Automotive supplier
Lund Intern. Holdings Inc.
09/97
11.2 Automotive accessories
Hucke AG
02/95
8.4 Apparel
Status: July 31, 2003
Overview
MBO
Intern. activities
Fund management
Fiscal year 2002/03
Summary
Annex
33
Most recent ten exits – DBAG not
dependent on IPOs
Company
Date of exit
Andritz AG
06/03
Secondary placement
Computec Media AG
03/03
Secondary buyout
Edscha AG
11/02
Secondary buyout
Rheinhold & Mahla AG
06/02
Trade sale
Hawe KG
05/02
Sale to majority shareholder
AvK/SEG Holding KG
10/01
Trade sale
Libro AG
07/01
Trade sale
Vitas Inc.
04/01
Repayment
Rockinger KG
03/01
Trade sale
Jeschke GmbH
03/01
Trade sale
Overview
MBO
Intern. activities
Fund management
Kind of disinvestment
Fiscal year 2002/03
Summary
Annex
34
Financial calendar 2004
Annual Press Conference 2002/2003
January 29, 2004
Analysts‘ Conference Call
January 29, 2004
Annual Meeting and 1st Quarter Report
March 18, 2004
Analysts‘ Conference Call
March 18, 2004
2nd Quarter Report
June 14, 2004
Analysts‘ Conference Call
June 14, 2004
Analysts‘ Conference
Overview
MBO
Intern. activities
June 2004
Fund management
Fiscal year 2002/03
Summary
Annex
35
Creating a new Mittelstand
Stock abbreviation:
Reuters: DBAG.F
Bloomberg: DBA
DE0005508105
ISIN code:
Stock market trading with official listing in PRIME STANDARD
Indices:
S-Dax
C-Dax-Industrial
For more information:
www.deutsche-beteiligung.com
Deutsche Beteiligungs AG Investor Relations
Kleine Wiesenau 1
Thomas Franke
60323 Frankfurt am Main
Tel.: +49 (69) 9 57 87-3 07
Tel.: +49 (69) 9 57 87-01
Fax: +49 (69) 9 57 87-3 91
e-mail: [email protected]
Overview
MBO
Intern. activities
Fund management
Fiscal year 2002/03
Summary
Annex
36
Cautionary statement regarding
forward-looking statements
This presentation contains forward-looking statements. Forward-looking statements are
statements that are not historical facts, including statements about our beliefs and
expectations. Any statement in this presentation that states our intentions, beliefs,
expectations or predictions (and the assumptions underlying them) is a forward-looking
statement. These statements are based on plans, estimates and projections as they are
currently available to the management of Deutsche Beteiligungs AG. Forward-looking
statements therefore speak only as of the date they are made, and we undertake no
obligation to update publicly any of them in light of new information or future events.
Forward-looking statements involve inherent risks and uncertainties. A number of important
factors could therefore cause actual results to differ materially from those contained in any
forward-looking statement. Such factors include the conditions in the financial markets in
Germany, in Europe, in the United States and elsewhere from which we derive a substantial
portion of our business.
Overview
MBO
Intern. activities
Fund management
Fiscal year 2002/03
Summary
Annex
37