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Deutsche Beteiligungs AG invests in congatec Holding AG

Cate­gory: Private Equity
Photo: Dr. Rolf Schef­fels, Member of the Manage­ment Board of DBAG
31. August 2020

Frank­furt am Main — Deut­sche Betei­li­gungs AG (DBAG) invests in conga­tec Holding AG (conga­tec), a leading supplier of compu­ter modu­les for indus­trial appli­ca­ti­ons. In the context of a manage­ment buy-out (MBO), DBAG Fund VIII, which is advi­sed by DBAG, will acquire the majo­rity of the shares from the foun­ding share­hol­ders. DBAG will invest around 23 million euros along­side the fund; in future, it will hold around 20 percent of the shares. In addi­tion, the conga­tec manage­ment will also parti­ci­pate. The closing of the purchase agree­ment is subject to the appr­oval of the anti­trust autho­ri­ties and is sche­du­led for the fourth quar­ter of 2020. The parties have agreed not to disc­lose the purchase price.

The MBO of conga­tec Holding AG is the second invest­ment of DBAG Fund VIII, which invests in medium-sized compa­nies — mainly in German-spea­king count­ries. The fund’s invest­ment period had star­ted on August 1, 2020; in the middle of the month, DBAG had struc­tu­red the fund’s first tran­sac­tion with the MBO of Multi­mon AG.

Global market leader in computer-on-modules
conga­tec Holding AG (www.congatec.com), head­quar­te­red in Deggen­dorf, Bava­ria, is a fast-growing tech­no­logy company in the field of embedded compu­ting with a focus on high-perfor­­mance so-called compu­­ter-on-modu­­les (CoM) and indus­trial single-board compu­ters (SBC). conga­tec focu­ses on the hard­ware design of CoMs, which account for around 80 percent of sales. CoMs are used for speci­fic appli­ca­ti­ons within a broa­der system, for exam­ple in indus­trial robots, image proces­sing or ultra­so­nic devices, and typi­cally have to meet speci­fic requi­re­ments, for exam­ple high relia­bi­lity as well as longe­vity even under adverse condi­ti­ons, real-time proces­sing or zero error tole­rance, often imple­men­ted in small sizes. CoMs are complete compu­ting units, they consist of a proces­sor, memory and proces­sor peri­pherals and are opti­mi­zed for speci­fic appli­ca­ti­ons. CoMs are essen­tial prere­qui­si­tes for advan­cing digi­tiza­tion because, for exam­ple, they make it possi­ble to network physi­cal and virtual objects and have them work toge­ther through infor­ma­tion and commu­ni­ca­tion tech­no­lo­gies. CoMs are also needed for arti­fi­cial intel­li­gence applications.

In the compu­­ter-on-module segment, the company, foun­ded in 2004, is the global market leader with a broad custo­mer base ranging from start-ups to inter­na­tio­nal blue-chip compa­nies. conga­tec has subsi­dia­ries in the USA, Taiwan, China, Japan and Austra­lia as well as in Great Britain, France and the Czech Repu­blic. 270 employees gene­ra­ted $126 million in reve­nue in 2019. This reve­nue is spread across a wide range of appli­ca­ti­ons — as a result, the company has so far hardly been affec­ted by the Covid 19 pandemic.

Growth through inter­na­tio­na­liza­tion and new proces­sor types
More than two thirds of congatec’s custo­mers come from the Euro­pean econo­mic area, and the share of sales to custo­mers in the USA or Asia is growing. This is expec­ted to acce­le­rate in the coming years. In addi­tion to grea­ter inter­na­tio­na­liza­tion, an expan­sion of the product range to include CoMs for new proces­sor types is also expec­ted to drive the company’s growth. A key driver here is also the rapidly growing demand for higher-perfor­­mance compu­ting solu­ti­ons in edge appli­ca­ti­ons, among others, in which CoMs in a network provide compu­ting power in real time on a decen­tra­li­zed basis — unlike cloud solu­ti­ons. In addi­tion, congatec’s RTS Hyper­vi­sor is an inno­va­tive soft­ware solu­tion that can set new stan­dards in terms of real-time perfor­mance — both as a stand-alone soft­ware solu­tion and in conjunc­tion with the CoMs produ­ced by congatec.

“We expect contin­ued strong growth in digi­tiza­tion,” said Dr. Rolf Schef­fels (photo), member of the DBAG Manage­ment Board, on the occa­sion of the contract signing. He contin­ued, “The pande­mic has given another strong boost to the ‘Inter­net of Things’ and ‘Indus­try 4.0’ — this will give a further boost to demand for the compu­ter compon­ents requi­red for this.” In recent years, DBAG has been inten­si­vely invol­ved with compa­nies in the embedded elec­tro­nics sector and has alre­ady inves­ted in a compa­ra­ble busi­ness model with its stake in duagon Holding AG. “This expe­ri­ence has now paid off in the assess­ment of the invest­ment oppor­tu­nity,” said DBAG board member Dr. Scheffels.

The Chair­man of congatec’s Manage­ment Board, Jason Carlson, today poin­ted to the diverse market poten­tial: “In DBAG, we have found a part­ner for the further deve­lo­p­ment of our company that is well versed in key end markets for our custo­mers and brings finan­cing exper­tise and M&A expe­ri­ence to the table — with DBAG and DBAG Fund VIII, we are well posi­tio­ned to take advan­tage of market opportunities.”

About Deut­sche Betei­li­gungs AG
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. DBAG focu­ses on indus­trial sectors in which German SMEs are strong by inter­na­tio­nal stan­dards. An incre­asing propor­tion of equity invest­ments are in compa­nies in the new focus 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. The capi­tal mana­ged and advi­sed by the DBAG Group amounts to appro­xi­m­ately 2.5 billion euros.

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