London, UK, 15 December 2023

Edison issues update on Deutsche Beteiligungs (DBAN): Solid exits in FY23, expanding into private debt

Deutsche Beteiligungs (DBAG) posted a strong 18.1% NAV TR in FY23 (to end-September 2023), which more than offset the NAV TR loss in FY22 of c 13%. Its performance benefited from, among other factors, comparable multiples expansion and a successful year in terms of realisations (in contrast to the muted exit activity across the broad global PE market). Moreover, DBAG’s management decided to enter the fast-growing private debt market through the acquisition of a majority stake in ELF Capital, with DBAG making a €100m investment commitment to ELF Capital’s funds. We believe this may have contributed to the recent update to DBAG’s distribution policy, which now assumes a minimum dividend of €1.00/share versus the previous 2023–25 management target of €1.60/share.

DBAG is a well-established investor and asset manager in the PE mid-market and a go-to partner for private company owners, especially families and founders, across Germany and neighbouring countries (eg Italy). It has a number of holdings in German industrials, as well as the industrial technology and services sector, representing 48% of its portfolio value at end-September 2023. This may appeal to investors seeking exposure to cyclical value companies in anticipation of a potential rebound in the German economy. That said, it has been tapping into a wider set of sectors more strongly for several years now, with significant exposure to so-called ‘growth’ areas, including IT services and software (22% of end-September 2023 portfolio value), broadband/telecom (11%) and healthcare (9%).

 
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