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Cautious optimism from Deutsche Beteiligungs

Frankfurt-based private equity firm Deutsche Beteiligungs says it is cautiously optimistic about its 2001/2002 earnings after selling two investments and announcing a further disposal is in the pipeline. According to Deutsche Beteiligungs, although capital markets continue to exhibit strong volatility and uncertainty, the markets for sales of investments to strategic and financial investors are being to normalise.

It has realised its stakes in Bavarian hydraulic manufacturer Heilmeier & Weinlein Fabrik fur Oel-Hydraulik (HAWE) and in Rheinhold & Mahla, an industrial and construction business. The company did not disclose details of the returns from these exits but said in a statement that capital gains, in line with the company’s expectations, had been realised.

Deutsche Beteiligungs and a co-investment fund acquired a 25 per cent stake in HAWE for EURO7.8 million in January 1997 when one of the two families that owned the business decided to leave. The investment was used to strengthen the equity base of the company and to help finance an aggressive growth strategy. In an agreement initially signed in May this year Deutsche Beteiligungs’ holding was acquired by the remaining family, which had not been able to buy the shares at the time of the first deal. The HAWE group has six manufacturing units in Germany and 10 international subsidiaries, employing a total of 1,250 staff.

Investing through DBG Auslands-Holding and a parallel fund, Deutsche Beteiligungs invested a total of EURO21.2 million in Rheinhold & Mahla. The VC’s 27 per cent stake was acquired in several tranches between December 1999 and September 2000. Subject to anti-trust clearance, German construction group Bilfinger Berger will acquire Rheinhold & Mahla for EURO13 per share, or a total of EURO117 million. An agreement has also been reached with majority shareholders Illbruck GmbH and Sabina Illbruck. The acquirer is making a public takeover bid for the remaining 18 per cent of free floating shares. Wilken Freiherr von Hodenberg, a member of the Deutsche Beteiligungs’ management board, said: “The realisation of this investment demonstrates that Deutsche Beteiligungs is capable of building value even in a difficult market environment particularly in view of the fact that valuations on the capital markets have clearly fallen since our investment in summer of 2000.”