DBAG exits Cloudflight in sale to Partners; reaps over 4x money

Lucas Herbert, managing director at the German sponsor, told Unquote the exit provides a money multiple of over 4x in a 3-year period.

DBAG will remain invested as a minority shareholder holding around 10%-15% in the company, he said, adding that management will also reinvest for a minority stake.

The sponsor decided to reinvest in the business as it has further growth potential in Europe. "We believe in the future growth plan of management. Under the leadership of Partners Group, it will expand to other European countries and become a European champion. The growth prospect is massive," Herbert said.

The deal marks the second exit from DBAG Fund VII, which held a final close in July 2016 on EUR 1bn. In 2019, the fund sold Blikk Group to EQT; DBAG also remained a minority shareholder, according to reports.

Under DBAG's ownership, Cloudflight completed four acquisitions, three of which were conducted last year. DBAG also helped the business grow from 300 employees to around 1,000 employees, said Herbert. Originally, DBAG invested EUR 45m of equity in the business, he said.

During the sale process, DBAG received 10 offers for the business, said Herbert.

As reported by Mergermarket, the sponsor launched the auction in September, advised by Houlihan Lokey, expecting offers valuing it at around 20x EBITDA of EUR 25m. FSN Capital, Apax Partners, BC Partners as well as Partners showing interest in the asset.

With Partners Group on board, Cloudflight will pursue add-on acquisitions, expand into new markets, strengthen its technical capabilities and expand into new verticals, according to a press release.

Partners Group is deploying equity via funds including Partners Group Direct Equity IV, which held a final close in September 2021 on EUR 15bn. The fund invests in mid-market enterprises in Europe, Asia and the US, according to Unquote Data.

The sponsor has recently been involved in a few ongoing sale processes in Europe, as reported by Mergermarket, including the sale of a minority stake in GHO-backed Sterling Pharma, the auction for H2 Equity-backed Optegra, in which partners Group has advanced to the second round, and for France-based Trescal.

Company
Cloudflight was founded in 2019 through the merger of Catalysts and Crisp Research, a software business and IT analyst firm, respectively. Headquartered in Munich, the company has operations in five countries with over 1,000 employees. and provides a full suite of services to aid clients to digitise operations.

People
Partner Group – Bilge Ogut (partner).
DBAG – Lucas Herbert (managing director).
Cloudflight – Roger Kehl (CEO).

Advisers
Vendor – Houlihan Lokey (M&A); Milbank (legal); PwC (financial due diligence); BCG (commercial due diligence).

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