Last close As at 05/08/2026
EUR21.35
▲ 0.05 (0.23%)
Market capitalisation
EUR376m
Research: Investment Companies
Deutsche Beteiligungs (DBAG) completed an issue of €100m senior unsecured convertible bonds on 28 June, with proceeds to be used for co-investments alongside DBAG and ELF Capital funds, and for general corporate purposes. The bonds will bear interest at a fixed rate of 5.5% pa and mature in 2030. They are convertible into up to c 3.25m of new and/or existing DBAG shares, which is the equivalent of 17.3% of the currently outstanding number of shares.
Deutsche Beteiligungs |
Convertible bond issue |
Investment companies |
2 July 2024 |
Analyst
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Deutsche Beteiligungs (DBAG) completed an issue of €100m senior unsecured convertible bonds on 28 June, with proceeds to be used for co-investments alongside DBAG and ELF Capital funds, and for general corporate purposes. The bonds will bear interest at a fixed rate of 5.5% pa and mature in 2030. They are convertible into up to c 3.25m of new and/or existing DBAG shares, which is the equivalent of 17.3% of the currently outstanding number of shares.
Convertibles instead of equity amid discount to NAV
We view the issue as being part of DBAG’s long-term plan of securing funding for the expansion of its investment portfolio. Its 2025/2026 ambition is to reach a net asset value of €840–980m, which implies a 10–16% CAGR based on end-FY23 NAV (when adjusted for dividends). The maturity of the bonds aligns well with the usual holding period of a private equity investment of around three to five years.
While DBAG’s shares used to trade at a premium to NAV (which does not account for its fund services business) before 2022, they have more recently traded at a discount to NAV, which stood at 25% as of market close on 27 July. Therefore, rather than wait for a narrower discount to NAV to issue new shares (as it did for instance in 2021), DBAG opted for a convertible bonds issue, with the conversion price set at €30.7952, representing a conversion premium of 22.5% to the reference share price, and a c 14.3% discount to DBAG’s end-March 2024 NAV per share.
Enhancing its firepower for new investments
We believe that DBAG already had a solid balance sheet position before the issue (as discussed in our May 2024 update), with €32.5m in cash and equivalents and €86.7m in undrawn revolving credit facilities (which have a total value of €106.7m and which were recently extended to June 2027). This covered 44% of DBAG’s €271.7m outstanding investment commitments at end-March 2024. DBAG’s outstanding credit liabilities at end-March 2024 included c €20m of drawn credit lines, as well as €30m in promissory notes (maturing in 2027–31). Moreover, its recently agreed disposals of in-tech and Solvares will result in more than €70m combined gross proceeds. That said, we understand that the latest decision to raise new funding was driven by management’s belief that there is currently a particularly good window of opportunity for new private equity and private debt investments.
Broadening its investor base
We note that the bonds were offered exclusively to institutional investors in certain jurisdictions outside of the US, and that pre-emptive rights of existing shareholders have been excluded (though Rossmann Beteiligungs, DBAG’s major shareholder with a 25.01% stake, participated in the placement). Therefore, the issue should allow DBAG to broaden its investor base, most of which has so far been retail investors (43.2% at end-September 2023) and family offices (36.2%), primarily from Germany.
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Research: TMT
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