DACH region suffers activity slump in 2014

DACH deal volume has fallen to its lowest position since 2002 – the last time it held only a 12% share of the European market. The Nordic region has ousted Germany from its usual position in the top three performers and even pushed France into third place.

As highlighted at the unquote" DACH forum in October by Klaus Bauknecht, managing director at IKB Deutsche Industriebank, "investor confidence is the issue." There is a "general reluctance to explore opportunities" as local funds wait for stability in eastern Europe and Russia.

While mid-market activity appears to be dropping off, the region seems to be gaining strength for large-cap deals, typically carried out by international players. In Q2 the region housed six of the top 10 largest buyouts in Europe, the biggest of that batch being ICG's management buyout of Minimax from IK Investment Partners in June for €1.37bn. However, Onex's €3.75m buyout of Swiss packaging company SIG Combibloc in November represented the largest deal of the year.

It should come as no surprise then that DACH deal value is comparatively high, despite a disappointing year for deal volume. In terms of combined value, the region is in second place on 21%, according to unquote" data, behind the UK with a 30% share of European contributions.

Beyond mega deals, unquote" looks back at key happenings in the region during 2014 in order to discern emerging trends for the year ahead.

The rise and fall of the IPO
Online clothing retailer Zalando first revealed its intention to float in October 2013, prompting many in trading circles to hold out for a long-hoped-for revival of the DACH IPO market. The eventual year-long wait took on even more significance when start-up incubator Rocket Internet entered the fray in September 2014. The flotations were expected to herald a wave of high-value technology IPOs for the region. When the two closely linked companies eventually hit the stock exchanges, both saw their share prices tumble within a matter of hours. Hellman & Friedman's online portal Scout24 postponed its plans for a 2014 listing shortly afterwards, suggesting the brief window for IPOs is now closed.

Venture champion
Online food ordering platform Delivery Hero lived up to the second part of its name in 2014, earning itself a €1bn valuation and the third-largest venture round ever recorded for a European company. The business has raised more than $635m in total through seven funding rounds, including a $350m round in September from existing investors Insight Venture Partners and Kite Ventures.

Delivery Hero raised two further funding rounds last year: Insight led an $88m series-E round in January 2014, while previous backers committed a further $85m in a series-F round in April. For those venture houses looking for the next unicorn, Germany represents fertile hunting ground.

Deals on the horizon
A number of large-cap buyouts and exits are already on the cards for 2015. Advent International is said to be looking to divest debt collection services firm GFKL, which it bought in an all-equity transaction in October 2009.

Terra Firma is also finally intending to sell its remaining stake in German motorway service station group Tank & Rast for around €2bn. It initially acquired the company in January 2005 for just more than €1bn, before divesting half of its stake to Deutsche Bank two years later. A refinancing of the company's €2.1bn debt load took place in November 2013, said to be worth an estimated 9x EBITDA and including senior bonds and PIK notes.

According to reports, Cinven will exit its truck component maker Jost Group this year, which could reap the buyout house €600m. It acquired the business in June 2008 for around €500-600m. In its place, it is reportedly looking to acquire Miesbach-based cargo handler Telair for up to $1bn. EQT is also said to be in the running, alongside several trade buyers.

Finally, both firms are believed to be interested in frozen cake company Coppenrath & Wiese, which could go for around €400m.

While the region failed to produce a textbook performance in terms of deal activity in 2014, 2015 could be the year that the DACH region retakes the spotlight.

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Send to  

• Topics
• DACH
• Buyouts
• Exits
• Venture
• Early-stage
• DACH
• Top story
• Germany
• Austria
• Switzerland
• Intermediate Capital Group
• IK Investment Partners
• Hellman & Friedman LLC
• Advent International
• Terra Firma
• Cinven
• EQT
• Unq2015Feb