DBAG portfolio companies vitronet and DING merge

Frank­furt am Main — vitro­net GmbH (“vitro­net”) and Deut­sche Infra­struk­tur und Netz­ge­sell­schaft mbH (“DING”), two invest­ments from the port­fo­lio of the private equity fund DBAG ECF mana­ged by Deut­sche Betei­li­gungs AG (DBAG), are merging and will in future operate as the vitro­net Group in the fiber optic and energy infra­struc­ture market. The merger now agreed will create a group whose pro forma sales in 2020 amoun­ted to around 340 million euros and which now employs around 2,300 people at more than 30 loca­ti­ons in Germany.

In the fast-growing market for the expan­sion of fiber-optic and energy infra­struc­ture, a provi­der is emer­ging with broad regio­nal coverage and a range of services that covers all the main value-adding steps, from plan­ning and cons­truc­tion of the faci­li­ties to opera­tion and service. The vitro­net Group conti­nues to see good oppor­tu­ni­ties to actively drive forward the conso­li­da­tion of this frag­men­ted market.

In 2017, Deut­sche Betei­li­gungs AG (DBAG) initi­ally struc­tu­red the manage­ment buy-out (MBO) of vitro­net GmbH along­side DBAG ECF. This was follo­wed in 2019 by the MBO of the STG Brauns­berg Group, which has since been opera­ting under the name Deut­sche Infra­struk­tur und Netz­ge­sell­schaft mbH. In the year of acqui­si­tion, vitro­net gene­ra­ted sales of 42 million euros, DING 18 million euros. In recent years, both compa­nies have grown stron­gly; 15 corpo­rate acqui­si­ti­ons to date have contri­bu­ted to this to a considera­ble extent. The Group’s pro forma sales have thus increased almost six-fold.

Since the start of the invest­ment, DBAG and DBAG ECF have inves­ted 49 million euros in the two compa­nies, of which DBAG accounts for 22 million euros. DBAG will hold a stake of around 39 percent in the newly formed vitro­net Group, while DBAG ECF will hold 46 percent; most of the remai­ning shares will be held by the Group’s manage­ment. The tran­sac­tion will have no further impact on the valua­tion of the invest­ments in DBAG’s balance sheet. Howe­ver, as of the most recent report­ing date of March 31, 2021, the value of the latest company acqui­si­ti­ons has been increased; these have also alre­ady been included in the fore­cast for fiscal 2020/2021, which was raised on March 26, 2021.

vitro­net, based in Essen, Germany, has so far focu­sed on acting as a gene­ral contrac­tor for fiber-optic projects. In recent years, various specia­list compa­nies along the value chain have been acqui­red and inte­gra­ted. vitro­net has thus deve­lo­ped into one of Germany’s leading end-to-end part­ners in what is known as FttH expan­sion (FttH: fiber to the home), meaning that it can offer all the essen­tial process steps for this expan­sion. DING, based in Bochum, has so far stood for effi­ci­ent infra­struc­ture expan­sion in the areas of tele­com­mu­ni­ca­ti­ons (fiber optics, FttH, mobile commu­ni­ca­ti­ons), energy (district heating, elec­tri­city, eMobi­lity) and utili­ties (gas, water, pipe­line) in Germany.

High market demand meets tight capacity

The Group is bene­fiting from the dyna­mic growth in demand for high-perfor­­mance Inter­net connec­tions. This is trig­ge­ring strong demand for network expan­sion services, which is being met by a shortage of corre­spon­ding capa­city in the market. To date, around 70 percent of reve­nue has been gene­ra­ted by the fiber-optic infra­struc­ture busi­ness. The Group’s services range from project plan­ning for new networks and their cons­truc­tion to the opera­tion and servicing of fiber-optic networks. The service share in parti­cu­lar is to grow. Busi­ness in the energy and utili­ties market, which has so far accoun­ted for around 30 percent of sales, is set to bene­fit from the energy tran­si­tion, among other things: To enable eMobi­lity on a large scale, for exam­ple, the infra­struc­ture will have to be trans­for­med. The Group sees itself as one of the leading service provi­ders for infra­struc­ture expan­sion in Germany.

In 2013, DBAG began inves­t­ing in compa­nies that expand or operate fiber-optic networks. The first two invest­ments (inexio and DNS:Net) were sold in 2019 and March 2021. In addi­tion to vitro­net and DING, DBAG, toge­ther with DBAG ECF and DBAG Fund VIII, holds invest­ments in three other compa­nies in the sector (netz­kon­tor nord, BTV and Deut­sche Giga Access).

Larger projects of tele­phone compa­nies, utili­ties and public utilities

“We have inves­ted in a growing market in which, howe­ver, speed in the further deve­lo­p­ment of the compa­nies is decisive for invest­ment success,” expres­sed Tors­ten Grede, Spokes­man of the Manage­ment Board of DBAG on the occa­sion of the tran­sac­tion with regard to the 15 company acqui­si­ti­ons. “We will also support the newly formed group to conti­nue to watch inor­ga­ni­cally.” This invol­ves, for exam­ple, closing exis­ting gaps in the regio­nal offering.

“Our custo­mers are incre­asingly looking for provi­ders who can inde­pendently handle ever-larger projects throug­hout Germany,” says Marc Lützen­kir­chen, Chair­man of vitronet’s Manage­ment Board. “We can now fulfill this claim even better with the syner­gies of the Group and the deca­des of expe­ri­ence of our subsi­dia­ries.” Last but not least, the new size of the Group will also improve its access to the capi­tal market and thus the finan­cing opti­ons for further corpo­rate acquisitions.

About DBAG

DBAG has made six plat­form invest­ments rela­ted to broad­band tele­com­mu­ni­ca­ti­ons expan­sion in Germany since 2013. — Deut­sche Betei­li­gungs AG, a listed company, initia­tes closed-end private equity funds and invests — predo­mi­nantly along­side DBAG funds — in well-posi­­tio­­ned medium-sized compa­nies with poten­tial. One focus for many years has been indus­try. An incre­asing propor­tion of equity invest­ments are in compa­nies in the growth sectors of broad­band tele­com­mu­ni­ca­ti­ons, IT services/software and health­care. The long-term, value-enhan­cing entre­pre­neu­rial invest­ment approach makes DBAG a sought-after invest­ment part­ner in the German-spea­king region. Assets mana­ged or advi­sed by the DBAG Group amount to €2.5 billion.