3 questions to smart minds
Photo: J. Diegruber | Partnersgroup

How private equity-savvy are German companies today?

For this 3 questions to J. Diegruber

Photo: J. Diegru­ber | Partnersgroup
5. March 2014

Accor­ding to figu­res from data provi­der Dealo­gic, the deal volume imple­men­ted in Germany through secon­dary buyouts amoun­ted to USD 5.2 billion in the 2013 finan­cial year, which is alre­ady 98 percent higher than in the previous year. Only in 2007 was the figure higher, at $9.8 billion. The high volu­mes are prima­rily due to the M&A deal between PE inves­tors BC Part­ners and EQT and sove­reign wealth fund GIC around Sprin­ger Science, which was only agreed in mid-June. — The trend toward deals among PE firms is a sign of an incre­asingly matu­ring German private equity market.

For this 3 ques­ti­ons to Head of Part­ners­group Munich Branch

1. How many deals did Part­ners­group do in Germany last year? How do you assess the oppor­tu­ni­ties in the current year?

As a global private markets mana­ger, we do not think in coun­try-speci­fic terms. We look at tran­sac­tions around the world and pick out the most attrac­tive ones, such as Hofmann Menü. A GP or mana­ger focu­sed on a parti­cu­lar region will always tell them that their market is attrac­tive right now. Our global presence with over 700 employees in 16 offices allows us to compare invest­ment oppor­tu­ni­ties on a global scale and select those with the most attrac­tive risk-return profile. In 2013, we looked at over 3,000 poten­tial direct invest­ments across our four asset clas­ses, Private Equity, Private Debt, Private Real Estate and Private Infra­struc­ture, and inves­ted in 86 of them: 31 in North America, 48 in Europe and 7 in Rest of World. Whether we invest in Germany in 2014 depends purely on the oppor­tu­ni­ties, but as a global mana­ger we are not forced to invest in Germany. Howe­ver, I can assure you that we are curr­ently looking at some inte­res­t­ing invest­ment oppor­tu­ni­ties in Germany.

2. You have just acqui­red ‘Hoff­mann Menu’. A company that has alre­ady gained multi­ple expe­ri­en­ces with diffe­rent PE inves­tors. How has the company deve­lo­ped in recent years?

The company has deve­lo­ped posi­tively and the previous owner Gilde did a good job in our view. Nevert­hel­ess, we see great deve­lo­p­ment poten­tial in the company for the future, for exam­ple through the deve­lo­p­ment of new custo­mer segments or further inter­na­tio­na­liza­tion. Our global network and our port­fo­lio of more than 3,000 compa­nies also help in this process. Among them are of course also segments and compa­nies that could be supplied by Hofmann Menue Manu­fak­tur in the future.

3. Are there many compa­nies that are as PE expe­ri­en­ced as ‘Hofmann Menue’? Examples?

Due to the posi­tive deve­lo­p­ment in the PE market and the incre­asing profes­sio­na­liza­tion in our indus­try, there are indeed many compa­nies and also manage­ment teams with longer PE expe­ri­ence. Against this back­drop, we will incre­asingly see secon­dary and tertiary buyouts. FTE Auto­mo­tive, Kautex Maschi­nen­bau, ISTA are just some of the examp­les from the past year.

Mean­while, it is also no longer a secret that inves­tors even achieve slightly higher returns with secon­da­ries than with primary buyouts. This is partly due to the fact that PE expe­ri­en­ced compa­nies have a proven busi­ness model, profes­sio­nal moni­to­ring and report­ing systems. On the Part­ners Group side, we have had very good expe­ri­ence in secon­dary buyouts world­wide, as we have also been able to leverage our global presence to increase returns through opera­tio­nal value crea­tion, in parti­cu­lar through buy & build/add on stra­te­gies and inter­na­tio­na­liza­tion. This allows locally successful medium-sized compa­nies to be built up into global firms.

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