Deutsche Beteiligungs AG: New Management In Place

Deutsche Beteiligungs AG (DBA:DE) has had a strong start to the year; its NAV increased 3.1% in Q1, it has announced four new investments year-to-date, and it successfully completed a generational change in management. Q1 results were buoyed by the strong performance of its largest holding Homag, which has rallied c 40% over the last six months, and an improvement in earnings from the majority of its holdings. We believe DBAG’s current share price appears fully valued given current market conditions, even though we expect the global nature of DBAG’s investee companies to provide resilience against slowing European growth.


New management in place
The previously announced management changes, which were approved at the annual meeting, represent the culmination of a generational change in management at DBAG. Professor Günther Langenbucher stepped down from the supervisory board as vice chairman while Wilken von Hodenberg was elected to the supervisory board as its new member. In this new role, Mr von Hodenberg will be able to continue to support the new board of management of Torsten Grede, Dr. Rolf Scheffels and Susanne Zeidler with his wealth of knowledge and expertise.

New investments
The faster pace of investments has continued into Q2. DBAG has so far announced two MBO deals alongside its managed private equity fund DBAG Fund V. In February 2013, DBAG announced it will acquire Formel D GmbH, investing up to €10.4m from its balance sheet for a 15% interest in the automotive industry service provider. in March 2013, DBAG announced it will acquire Stephan Machinery, investing up to €3.7m for a 19% interest in the food production machine manufacturer. Despite these transactions, DBAG still has considerable funds available for further investment opportunities. We estimate that combined with its co-investment funds, DBAG has c €800m still to invest.

Valuation: Premium valuation
DBAG trades at a premium to its peers (7% premium to NAV adjusted for dividend paid vs LPX Europe 21% discount), which we believe is justified given its strong performance, robust balance sheet, regular dividend and focused investment mandate.

To Read the Entire Report Please Click on the pdf File Below.