RCS - Deutsche Beteiligung - Edison issues review on Deutsche Beteiligungs

Deutsche Beteiligungs AGAnnouncement

20/12/2022 15:30

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RNS Number : 3714K  Deutsche Beteiligungs AG  20 December 2022

London, UK, 20 December 2022

 

Edison issues review on Deutsche Beteiligungs (DBAN)

Deutsche Beteiligungs (DBAG) posted a c 13% NAV decline in total return terms
in FY22 (to end-September 2022), affected by lower public equity multiples
used in the valuation and macroeconomic headwinds in Germany. In light of its
high investment activity in FY22 (€176.8m, skewed towards IT services and
software) and faltering private equity exits globally, management has proposed
a lower dividend (to preserve capital for new and follow-on investments) of
€0.80/share (vs €1.60 paid from FY21 profit), but reaffirmed its mid-term
dividend planning of at least €1.60 pa. DBAG now trades at a 17% discount to
NAV (versus a five-year average premium of 10%).

 

Several headwinds (discussed later in the note) will likely push Germany into
recession in 2023. While this currently weighs on DBAG's portfolio, some of
its 'growth' sectors (eg IT services and software, 21% of portfolio value) may
prove resilient, while DBAG's industrial holdings may at some stage start
benefiting from the easing of supply chain issues and measures aimed at
passing on cost inflation to customers introduced in 2022. The challenges may
have already been at least partially discounted, given that its current market
capitalisation now implies a c 48% discount to its private investments
portfolio value (as per end-FY22, versus the peer average of c 31%), assuming
that DBAG's fund services segment is valued in line with listed alternative
asset managers. Hence, improving M&A activity, earnings prospects and
investor sentiment could trigger a narrowing of the discount.

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