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A family-backed private equity group emerges as the biggest player in the German buyout market

Germany’s increasingly active buyout market is attracting more private equity funds than ever. Top of the list of players is a Munich-based family-backed private equity group. 

Bregal Unternehmerkapital (entrepreneurial capital) has transacted more midmarket buyouts in Germany than any other private equity group in the last two years. Owned by the Dutch-German family, the Brenninkmeyers, Bregal Unternehmerkapital is part of a number of private equity businesses trading under the Bregal name. 

Private equity, whether that’s institutionally led, or family backed, will act as a catalyst for change

Bregal Unternehmerkapital has been involved in eight buyouts in the mid-market segment of private equity in Germany since the beginning of 2018, more than any other private equity group. It buys both minority and majority stakes in businesses, many of them family-owned, like its most recent acquisition, EA Elektro-Automatik.

A classic hidden champion, EA Elektro-Automatik makes high-end electronic power supply devices and is based in Viersen, near Düsseldorf. Its founder did the deal partly because of not being able to find a successor in the family to take over – a common challenge among many of privately controlled family businesses in Germany. 

The Brenninkmeyers, best known for their ownership of the European department store group C&A, have since diversified their wealth in many different businesses. They are among Europe’s wealthiest family dynasties. 

Family Capital has written early about the investment businesses owned by the family, which all sit under the umbrella of the Zug, Switzerland-based holding group Cofra. 

Bregal’s increased profile in the buyout market in Germany comes at a time when more companies there are prepared to sell equity to private equity investors than ever before. 

Last year, 51 mid-market buyout transactions took place in Germany, up from 47 the year before and 35 in 2017, according to Deutsche Beteiligungs, the country’s biggest listed private equity group. Out of those 51 buyout transactions, 35 were by either a founder entrepreneur or family-owned business, up from 19 the year before. 

Although institutional private equity groups like Deutsche Beteiligungs, Paragon Partners, and the Dutch-based Waterland Private Equity Investors are still among the biggest players in the mid-market private equity market in Germany, family capital-backed groups like Bregal are playing a bigger role. 

Other players in this ilk are Findos Investor. Munich-based, Findos gets most of its buyout capital from family capital, rather than institutions. It also co-invests with family capital as it did with one of its most recent transitions (HTS tentiQ) when it worked with Bitburger Holdings, the holding and investment group owned by the Simon family, and better known for their ownership of the beer company Bitburger. 

Also, Family Capital reported last year that Andreas Jacobs, who sits on the board of the Swiss-based Jacobs Holding, a big family investment/foundation group, is poised to set up a fund to buy Mitteland businesses in Germany. 

Across the board, private equity funds will play an increasingly bigger role in German Mittelstand sector, not least as many of these businesses are being disrupted by the digital revolution as well as succession issues. As such, they are more open to doing deals with financial investors. 

“Germany’s hidden champions, many of them family businesses, are facing disruption at numerous levels, ” says Peter Englisch, global family business leader at PwC.

“Some of them will meet the challenges, others not. What is inevitable, new business models and alliances will emerge, changing the business landscape as we know it. Private equity, whether that’s institutionally led, or family backed, will act as a catalyst for change.”

 

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