Deutsche Beteiligungs AG (DBAN); expects up to 50% lower gains on investment activity year-on-year in Q3 FY18/19

Published on 11-07-2019 12:15:00
Author Michal Mordel

Deutsche Beteiligungs (DBAG) announced that the company expects a significant year-on-year decline in Q3 FY18/19 net income due to a 50% decrease in adjusted net gains from investment activity. In Q3 FY17/18 the company generated adjusted consolidated net income and adjusted net results from investment activity of €9.1m and €8.4m, respectively.

Consequently, DBAG has decreased its forecast for FY19 net income and now expects the figure will fall more than 40% compared to the five-year average, based on current market valuation multiples. This compares with previous DBAG guidance, which expected net income 20–40% below the five-year average of €48m. That said, the company anticipates the FY19 figure will still be positive.

DBAG has released its FY18/19 guidance in November 2018 and already highlighted in May 2019 that due to a deteriorating market environment the target remains under pressure. It should be noted that revaluations of portfolio companies are tied to current market conditions, but DBAG derives its cashflow from realizations and from management fees collected from its funds instead.

In the first three quarters of FY18/19 DBAG added three management buyouts (MBOs) to its portfolio (FLS, Kraft & Bauer, Sero, and Cloudflight) and exited Infiana. The transaction implied a 2.0x invested capital multiple or more with a realised gain contributing to its financial results. DBAG Fund VII has already invested around 60% of the committed capital since its launch in 2016.

DBAG will publish its H1 FY18/19 results on 8 August 2019.

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