DBAG launches DBAG Fund VIII

The GP is aiming for a first close in Q1 2020 and expects to close on or just above target. The fund was launched in June 2019, with Simpson Thacher and P+P Pöllath and Partners providing legal advice.

Its predecessor, DBAG VII, held a final close in July 2016 on €1bn and is 71% deployed as of August 2019. The fund expects to make one to two more investments.

Like DBAG VII, DBAG VIII will consist of two sub-funds. The main fund has a target volume of €900m, including €210m in DBAG co-investments. The top-up fund has a volume of €200m, with a contribution of €45m from DBAG. Torsten Grede, spokesman for the board of management of DBAG, told Unquote: “This enables us to utilise the top-up fund when we need to underwrite higher equity cheques. In DBAG VII, we used the top-up fund in three cases, most recently in Cartonplast.”

The firm also said in a statement that it plans to carry out more principal investments from its own balance sheet going forward, and target long-term, predominantly minority stakes in owner-managed mid-market companies.

Investors
The fund will have a contribution of €255m in total from DBAG. It has so far received commitments of more than €1bn from investors. The minimum subscription for the firm's funds is typically €10m.

Asked about the fund's LP base, Grede said: "We have a high proportion of re-ups, with a preliminary figure of more than 75%. The general structure of our LP bases is made up of 50% pension funds and foundations, and then a significant proportion of funds-of-funds and other investors."

The geographical spread of the LP base is likely to be similar to previous vehicles, according to Grede: "Traditionally our funds have 50% of their capital from European countries beyond Germany, 25% from North America, and the rest is divided between Germany, Asia and the Middle East."

LPs in DBAG VII included pensions funds such as Arzteversorgung Westfalen-Lippe, as well as funds-of-funds managers like Denmark's ATP Private Equity Partners.

Investments
The vehicle will write equity tickets of €40-100m for companies valued at €75-250m. The fund expects to hold back 10-15% for follow-on investments.

In 2013, DBAG began to invest in areas beyond its previous sector focuses of mechanical and plant engineering, automotive suppliers, and industrial services and components. Grede told Unquote that Fund VIII will focus on broadband, telecoms, IT services, software and healthcare.

It will make 12-14 investments in total. The fund could make co-investments, according to Grede.

The fund has so far not made any investments and currently expects not to do so before its close in Q1.

People
Deutsche Beteiligungs AG - Torsten Grede (spokesman for the board of management).

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