Deutsche Beteiligungs - Strengthened balance sheet for new opportunities
Deutsche Beteiligungs (DBAG) reported an 8.5% NAV total return (TR) in FY24 (to end-September 2024), supported by positive movements in valuation multiples, which offset the negative impact from changes in earnings and the higher net debt of portfolio companies. DBAG’s portfolio remains affected by the subdued macroeconomic environment in Germany, although its continued portfolio shift away from more traditional industrial holdings likely provided a cushion. Following the convertible bond and promissory loan note issues earlier this year, along with several successful exits, DBAG’s strong balance sheet positions the company well to explore the many attractively priced investment opportunities that management sees in the current market environment. DBAG’s shares now trade at a 38% discount to the last reported NAV of its private markets investments, on top of which DBAG’s shares offer exposure to the company’s fund services business. Therefore, we consider the discount wide even considering the market headwinds.Deutsche Beteiligungs is an investment company. Co. raises closed-end private equity funds (DBAG funds) for investments in equity or equity-like financial instruments primarily in non-quoted companies. Co. invests as a co-investor in companies alongside DBAG funds by way of majority takeovers or minority investments. Co. basically structures majority takeovers as so-called management buyouts. Expansion capital financings are made by way of a minority investment, for example, via a capital increase. Geographically, Co. concentrates its investments primarily on companies domiciled in German-speaking regions.
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