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Law360 (May 13, 2020, 11:01 AM EDT ) Deutsche Beteiligungs AG said Wednesday it has clinched its eighth flagship fund after grabbing around €1.11 billion ($1.21 billion) from limited partners, despite economic difficulties related to the coronavirus pandemic that have affected the overall value of the firm's portfolio.
The German private equity shop, which goes by DBAG for short, wrapped up DBAG Fund VIII slightly above the original target, and the firm itself co-invested €225 million, according to a statement. The new vehicle is actually made up of multiple subsets of funds; DBAG Fund VIII features a roughly €910 million principal fund, along with a supplementary fund with €199 million in tow. Between the two funds, individual investments are expected to reach up to €220 million.
Deutsche Beteiligungs invests in mid-sized companies, known as "Mittelstand," typically with annual revenues between €50 million and €500 million. The firm focuses on industrial sectors — including component manufacturing, automotive suppliers and industrial support services — which are strong in Germany.
"Investors trust us to find and develop attractive mid-sized companies in Germany and selected neighboring countries, despite these challenging times," said Torsten Grede, CEO of Deutsche Beteiligungs. "The new fund will secure our financial capacity to act for many years to come — which is particularly advantageous in the current market situation."
Grede also noted that around 86% of the capital commitments from the new fund came from LPs that have previously invested with the firm. Investors in the new fund include pension funds, insurance companies, foundations, family offices and asset managers across Europe, the U.K. and U.S.
The closing of the new fund comes on the same day that Deutsche Beteiligungs revealed the impact of the COVID-19 pandemic on its portfolio and future financial forecasts, saying in a separate statement Wednesday that the net asset value of its PE investment portfolio declined by about 20.2% from the beginning of the financial year.
Economic hardship notwithstanding, Deutsche Beteiligungs said it feels confident in its strategy. The firm said the coronavirus crisis has affected its 28 portfolio companies in varying ways, posing significant difficulties for industrial companies while barely having an impact on the broadband and telecommunications sector, if at all. Overall, six of the 28 companies in its portfolio made positive contributions to earnings in the first half of the year.
"This means that we can now reap the fruit of our portfolio diversification activities of the past few years, and benefit from the substantial size our portfolio has now reached," Chief Financial Officer Susanne Zeidler said.
The closing of the new fund comes a little less than four years since the firm clinched its previous fund, DBAG Fund VII, with €1 billion in tow. That fund closed in July 2016 and was raised with help from legal counsel P+P Pollath + Partners.
Legal counsel for the new fund was not immediately known, and a representative for the firm did not immediately respond to a request for further information.
--Editing by Marygrace Murphy.
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