Deutsche Beteiligungs AG (DBAG) has announced the final close of its DBAG Expansion Capital Fund at €242m.
Launched in August 2010, the fund had a target of €200-250m. The firm considers this close as a "big success”, especially because capital committed to funds in Europe in 2010 hit a trough not seen since 1997.
The fund has a 5+5 structure and at this stage there are no plans for an extension period. Management fees, carry and hurdle were described as industry standard.
This is DBAG’s first closed-end growth fund. The firm has a long history as a growth investor, but has not made a growth investment in the past 10 years. Previously, DBAG invested money from its balance sheet or from funds sponsored by major shareholders.
In total, Deutsche Beteilingungs has assets of around €450m available for equity capital investment in mid-sized companies. DBAG’s ongoing buyout business will remain unchanged. Its current buyout fund, DBAG Fund V, has made six investments, with its most recent acquisition being the Romaco group. The fund is more than half invested.
Investors have committed €142m to the fund, while the other €100m comes from DBAG’s balance sheet. Nearly 40% of the commitments came from new backers, including five institutional investors. The remaining capital was committed by six existing investors in the DBAG buyout funds. Sixty percent of the capital comes from Germany – the rest comes primarily from the US and France.
The vehicle will target mid-sized companies and typically support family-run businesses seeking to finance their growth strategies via capital increases with an equity injection, or to finance borrowings. The fund will make minority investments.
DBAG will continue to focus on companies operating in select core sectors of the industry; namely, industrial service providers that have leading positions in their markets, potential for earnings growth and an entrepreneurially-geared management with an ambitious business plan.
The size of target companies will also remain unchanged – potential investee businesses should generate annual revenues of between €50-500m. Equity capital investments made by the latest fund will range from €10-30m, although there may be exceptions.
DBAG, the fund manager, has an investment team of 21 people. Kronstein acted as placement agent and Pöllath + Partner provided legal advice.
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