Capiton goes independent, targets mezz

Berlin-based private equity firm Capiton has bought itself out from parent company Gothaer Insurance, and is exploring a possible move into mezzanine investments in Mittelstand companies.

Capiton, the German private equity investor that focuses primarily on buyouts and development capital investments in medium-sized German companies, has completed its own buyout as well as announcing a possible move into the mezzanine sector.

Gothaer Insurance, which was previously the sole shareholder in Capiton, will retain a ten percent interest under the terms of the buyout. The senior management of Capiton and its supervisory board will have a 60 per cent stake going forward, employees will own 20 percent, while ten percent has been earmarked for a “potential strategic partner” whose identity is unknown.   

Capiton will continue to manage the private equity portfolio of Gothaer, which consists of investments worth €500 million in total. Companies in the portfolio include SVT, the fire protection provider; Refresco, the Dutch fruit juice and soft drink producer; and Studienkreis, the private tuition service.

In a statement, Capiton said it would continue to invest in established businesses operating in fragmented industries that lack the capital necessary to facilitate consolidation. But it added that it was also exploring mezzanine opportunities in the Mittelstand, especially in situations where entrepreneurs are looking for financings that do not involve bringing in new third party shareholders.

Capiton managing director Stefan Theis said: “These mezzanine activities will only be a viable business if the pricing of mezzanine capital properly reflects the associated risks and if this mezzanine capital can be packaged and placed on the capital markets as a structured product, for example in the form of CMOs (collateralised mezzanine obligations).”

The Capiton management team has remained unchanged following the buyout, with Stefan Theis and Andreas Kogler continuing as managing directors. Reinhard Blei will continue to serve as chairman of the supervisory board.

Capiton was formed from the merger of the captive private equity activities of Gothaer – which has been involved in direct private equity investment for more than 20 years – with private equity firm BB-K, which was acquired by Gothaer. The €150 million Capiton II fund, which was launched in the first half of 2003, has closed four investments so far. Unlike its predecessor, the fund raised some of its capital from outside Gothaer.