capiton concludes its own buyout

At the end of May, the senior management and employees of Berlin-based private equity firm capiton AG concluded an MBO. The previous sole shareholder Gothaer Insurance Group will retain a 10% interest. capiton will continue to manage the private equity portfolio of Gothaer consisting of some E500m of investments. As a result of the transaction, senior management and the supervisory board together hold a 60% ownership interest and an ownership interest of approximately 20% is held by the employees. The remaining 10% is earmarked for a potential strategic partner. capiton was a result of the merger between the captive private equity activities of Gothaer, which has been making direct private equity investments for more than 20 years, and the private equity firm BB-K mbH, acquired by Gothaer. Currently, capiton manages a private equity portfolio consisting of approximately E600m invested across some 35 investments. Over the last twenty years, capiton has been able to generate a return in excess of 20% p.a. Since its inception last spring, the current fund capiton II has already been able to close four investments, amongst which an investment in Borsig GmbH. capiton will not change its current strategy and will continue to focus on MBOs and development capital transactions for medium-sized German companies. capiton will especially focus on established businesses operating in fragmented industries that lack the capital necessary to facilitate consolidation. Investments in turnaround situations and venture capital are not part of capiton's investment focus. capiton's senior management team consisting of managing directors Stefan Theis and Andreas Kogler will remain unchanged. Reinhard Blei will continue to serve as chairman of the supervisory board. According to Reinhard Blei: 'capiton's MBO should create significant interest in Germany and abroad. International investors are showing an increasing interest in private equity investments in Germany, Switzerland and Austria. As an independent asset manager, capiton is ideally positioned to provide an investment opportunity for these investors.' The company is currently investigating the opportunity to act as a provider of mezzanine financings to German mittelstand companies. capiton believes that the mezzanine market is a significant growth opportunity, especially in situations where entrepreneurs are looking for financings that do not entail new third party shareholders. However according to managing director Stefan Theis, 'these mezzanine activities will only be a viable business if the pricing of mezzanine capital properly reflects the associated risks and if this mezzanine capital can be packaged and placed on the capital markets as a structured product, for example in the form of CMOs (collateralized mezzanine obligations).

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