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FUND INVESTMENT SERVICES

Deutsche Beteiligungs AG relies on a close-knit team of creative, motivated and well-trained employees. They are our most valuable asset. With more than 250 years of combined private equity experience in Germany’s mid-market sector, they are essential to the success of the Fund Investment Services segment.

They use their vast knowledge to prepare the fund’s investment decisions, provide support to the portfolio companies and advise funds when they are eventually sold. Their success is a prerequisite for our ability to achieve sustainable increases in assets under management and advisement and, as a result, to achieve sustainable increases in fee income from fund management and advisory services.

But our investment team has more to offer than sophisticated analytical skills and profound industry expertise: the team members invest their own money in parallel with the funds and DBAG. This creates a high level of identity of interest and is one of the fundamental features that sets our business model apart from most others.

EXPERTISE WITHIN THE TEAM


 

FUND INVESTMENT SERVICES

ASSETS

RATIONALE

Assets under management and advisement form the basis for fee income from Fund Investment Services. We calculate the value as the sum of the capital invested by DBAG and DBAG funds (portfolio companies at cost) and the capital commitments that can be called from the third-party investors in the DBAG funds. In place of DBAG’s commitments in co-investment agreements, DBAG’s available financial resources, including other financial instruments (loans granted by DBAG to intra- Group investment entities for the temporary financing of new portfolio companies), are included.

DEVELOPMENTS IN 2016/2017

  • Slight increase overall, despite considerable returns to fund investors following disposals, due to further capital commitments for DBAG ECF.
  • Drop in outstanding capital commitments after amounts called for new investments in the financial year 2016/2017 (DBAG Fund VII: more than 20 percent of the committed capital called in less than a year).
  • Outstanding capital commitments will drop even further as investment activity progresses; they will also decline due to advisory and management expenses.
  • DBAG’s financial resources increased significantly following returns after very successful disposals; will also drop in the future as investment activity progresses, but also due to the distribution.

OUTLOOK

Assets under management and advisement initially reached a peak following the subscription closing date for a new investment period of DBAG ECF (DBAG ECF I). The two funds that are currently investing, DBAG Fund VII and DBAG ECF, are both at the start of an investment period that will span several years. Assets can only increase if a new fund is launched or, as in the previous financial year, following very successful dis- posals, which initially increased DBAG’s financial resources considerably.

IN BRIEF

INCOME

RATIONALE

Fee income from fund management and advisory services is easy to predict. It is stable but does not develop continuously. The basis for fee income declines along with disposals; it increases with the start of the investment period of a new fund, which has first been initiated and closed. The result from fund investment services contains two expense items that are also incurred by unlisted private equity companies: expenses for the investment team and expenses for the investment process. Moreover, for the years in which a new fund is launched, there are expenses pertaining to legal advice and other services in connection with the new fund.

DEVELOPMENTS IN 2016/2017

  • Income from DBAG Fund VII is included for the first time but only for around nine months.
  • Following the disposals from the DBAG Fund V portfolio, the income from this fund is much lower: 2.6 million euros compared with 3.9 million euros previously.
  • Income from DBAG Fund VI is also lower following the disposal of Schülerhilfe and the end of the investment period: 11.3 million euros compared with 14.0 million euros.
  • Due to the successful business activity, higher variable remuneration for employees and members of the Board of Management is anticipated compared to the previous year.

OUTLOOK

In 2017/2018, income will be collected from DBAG Fund VII for the first full financial year. As a result, the fee income from fund management and advisory services is likely to reach a new all-time high of 28.8 million euros. We do not expect to see any major one-off factors putting pressure on earnings. Earnings will therefore increase considerably.