Deutsche Beteiligungs, the Frankfurt venture capitalist, today reported a loss of E1.2m for the three months ending on January 31 this year.
Gustav Egger, head of investor relations, was quick to point out that returns on investments do not come at regular intervals. “We made a loss because there were no exits. Capital gains do not come in quarterly installments. They either come when you make an exit or they don’t come at all.”
In the corresponding period last year, Deutsche Beteiligungs made a profit of E24.8m, which amounted to 66 per cent of their total earnings over the year. The cash came when Deustche Beteiligungs sold their stake in Sebaldus, a media company.
Egger also noted that the overall value of investments was going up. “You make a loss when the value of investments is more than the value of exits,” he said. “And the past couple of years have seen bigger and bigger investments. So our older investments are sold off at a lesser price” [than investments made now would be because the original investment was smaller].
Deutsche Beteiligungs gets the extra cash needed for the ever-increasing investments through capital increases. Last July, it raised E58m. “We will maybe do another next year and finance growth that way,” says Egger.
But there is a limit to the size of investment Deutsche Beteiligungs wants to make. “We are dedicated to the midsize market,” says Egger. “We are not going for the big auctions.”
And the company has no plans to change its investment strategy for the year ahead. “We are plain German Mittelstand and we are sticking to that,” says Egger. “We were being beaten by our shareholders this time last year for not going into internet companies – now they are congratulating us.” Internet investments represent less than one per cent of the Deutsche Beteiligungs portfolio.
Over the three months, the company made investments of E12.3m. Of this, E8.4m was invested in new projects, including a 49 per cent stake in Metro Zeitschriften, an Austrian media company; a 5.3 per cent stake (alongside Harvest) in priNexus, a marketing company; and a 5.6 per cent stake in Logisco, a transport firm.
It also achieved three exits, including the listing of traffic communications company Funkwerk on the Neuer Markt and the sale of its 75 per cent stake in Gong Verlag to the WAZ Media Group.