Exit: DBAG sells Telio stake to Charterhouse Capital Partners

Photo: Tom Alzin, Member of the Manage­ment Board of DBAG
14. June 2021

Frank­furt am Main — Deut­sche Betei­li­gungs AG (DBAG) successfully comple­tes its invest­ment in the tele­com­mu­ni­ca­ti­ons and soft­ware company Telio. Its shares in the company will be sold to Char­ter­house Capi­tal Part­ners LLP, a finan­cial inves­tor based in the United King­dom. The shares of DBAG Fund VI, which was advi­sed by DBAG, and the Telio manage­ment will also be sold. Corre­spon­ding contracts were signed last week; their execu­tion is still subject to regu­la­tory appr­ovals. The tran­sac­tion is expec­ted to close within the next four months.

DBAG is now reali­zing proceeds from the sale, which roughly corre­spond to the valua­tion of the invest­ment in DBAG’s most recent IFRS inte­rim finan­cial state­ments (March 31, 2021). Ther­e­fore, the tran­sac­tion will not add any further value in the current quar­ter. Howe­ver, addi­tio­nal value contri­bu­ti­ons may arise from the future deve­lo­p­ment of the company via a re-inves­t­­ment: DBAG and DBAG Fund VI will invest part of the proceeds from the sale and will hold around 13 percent (of which DBAG will hold around 2.5 percen­tage points) of Telio shares in the future.

Further dispo­sal of the DBAG Fund VI portfolio
The sale of the invest­ment in Telio is the fifth comple­tion of a manage­ment buy-out (MBO) from the DBAG Fund VI port­fo­lio. A further share­hol­ding (Pfaud­ler Group) was mainly sold last year. The fund had struc­tu­red eleven MBOs between 2013 and 2016. With DBAG Fund VI, DBAG had begun to invest incre­asingly outside tradi­tio­nal indus­trial sectors; Telio is one of the MBOs from new growth sectors.

Telio (, Hamburg) deve­lops, installs and opera­tes commu­ni­ca­tion and media systems for the correc­tional system, thus making a signi­fi­cant contri­bu­tion to the reso­cia­liza­tion of prisoners. Telio installs tele­pho­nes and asso­cia­ted systems in prisons that allow inma­tes to make control­led calls — from the cell wing or directly from their detention room. The range of services includes other means of commu­ni­ca­tion: tele­vi­si­ons, DVD play­ers, radios and compu­ters with limi­ted Inter­net access. The basis for commer­cial success is initi­ally invest­ment in appro­priate instal­la­ti­ons (cables, termi­nal equip­ment) and soft­ware deve­lo­ped in-house for moni­to­ring and billing usage. The soft­ware takes over part of the work of the correc­tional offi­cers and thus faci­li­ta­tes their daily prison routine. Telio also plans to tran­si­tion to Inter­­net-based services and telephony.

Corpo­rate acqui­si­ti­ons to acce­le­rate transformation
DBAG and DBAG Fund VI had inves­ted in Telio in April 2016 in the course of an MBO and curr­ently hold 83 percent of the shares, of which DBAG holds 15.3 percen­tage points. Since then, Telio has become a global leader in inmate commu­ni­ca­ti­ons and the tech­no­logy and infra­struc­ture needed to support it. Sales have more than tripled; in 2020, they amoun­ted to around 83 million euros. In addi­tion to orga­nic growth, company acqui­si­ti­ons also contri­bu­ted to the growth rate of more than 22 percent per year on average; DBAG and DBAG Fund VI had twice provi­ded addi­tio­nal funds for this purpose. Telio has ente­red new regio­nal markets and signi­fi­cantly expan­ded its product offe­ring, for exam­ple with tech­no­logy that detects and stops the ille­gal use of cell phones in prisons. Telio is incre­asingly focu­sing on digi­tal solu­ti­ons, for exam­ple in the areas of video tele­phony and e‑learning. Telio is now repre­sen­ted in 700 faci­li­ties in 21 count­ries world­wide; 80 percent of sales are gene­ra­ted in Europe, nine percent of which are in Germany. Since the begin­ning of the invest­ment, the number of employees has increased to 218.
more than doubled.

“Telio has under­gone a major trans­for­ma­tion and once again impro­ved its market posi­tion,” DBAG board member Tom Alzin said today; “demons­t­ra­ting once again that corpo­rate acqui­si­ti­ons can decisi­vely acce­le­rate a company’s deve­lo­p­ment — and in this case, its repo­si­tio­ning.” And, “In no small part, heavy invest­ment in Inter­­net-based commu­ni­ca­ti­ons has made it possi­ble for many inma­tes to main­tain cont­act with their loved ones via phone and video in recent months, despite pande­­mic-rela­­ted visi­tor bans.”

Alan­tra advi­sedChar­ter­house Capi­tal Part­ners on an invest­ment in Telio Manage­ment GmbH. Alan­tra is a global alter­na­tive asset manage­ment, invest­ment banking and credit port­fo­lio advi­sory firm focu­sed on provi­ding services to busi­nesses, fami­lies and inves­tors opera­ting in the middle market segment. The Group has more than 540 profes­sio­nals in Europe, the USA, Latin America and Asia.

About Char­ter­house

Char­ter­house is one of the longest estab­lished private equity firms in Europe. The company combi­nes exper­tise and capi­tal, working with ambi­tious foun­ders and manage­ment teams to drive trans­for­ma­tive change. Char­ter­house takes a selec­tive, convic­­tion-based approach and invests in high-quality middle-market Euro­pean compa­nies in the services, health­care, specia­li­zed indus­tri­als and consu­mer sectors. The focus is on tran­sac­tions with an enter­prise value of between €200 million and €1.5 billion.

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. 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.

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