DBAG sees NAV drop 15% amid market uncertainty

The net asset value (NAV) of its private equity investments stood at EUR 573.7m at the end of the 2021/2022 financial year, a drop from EUR 678.5m the previous financial year, the report said.

"[The] war in Ukraine and rising energy prices dramatically exacerbated inflationary developments which had already been evident beforehand. Central banks responded by raising reference interest rates, thus accepting an economic slowdown," the GP said in the statement.

"This burdened earnings at some of DBAG's portfolio companies. Likewise, capital markets multiples declined, affecting the valuation of portfolio companies and leading to a significant negative effect on our portfolio companies," it added.

Despite the macro environment concerns, DBAG anticipates the NAV to increase by between 14% and 18% per annum for the current and the two subsequent financial years, assuming that peer group multiples used for the valuation of portfolio companies remain unchanged, it said.

Part of the strategy to improve valuations will come through "value appreciation strategies" such as bolt-on acquisitions, it said. It noted, for example, that it made 28 add-on acquisitions during the financial year just passed.

Peers including Eurazeo have also seen a valuation drop in their portfolio companies amid the volatile markets, as reported.

During the 2021/2022 financial year, DBAG made eight platform investments including IT services company akquinet and in-tech, an engineering services and software company.

The GP's latest vehicle is Fund VIII, which raised EUR 1.1bn in 2019, according to Unquote Data. It has plans for a ninth buyout fund targeting EUR 1.3bn-EUR 1.5bn next year, as reported by Unquote in May.

During the financial year, the GP partially sold two companies, most recently Cloudflight, a digital-transformation services provider, in a deal with Partners Group last month. DBAG was able to realise more than four times the capital invested, as reported, after a holding period of just over three years – in a challenging capital markets environment. DBAG also noted that it refinanced one of its portfolio companies during the financial year.

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• Deutsche Beteiligungs AG