Deutsche Beteiligungs AG – Opportunity to invest German Mid Cap Conference Frankfurt am Main,...

Deutsche Beteiligungs AG – Opportunity to investGerman Mid Cap ConferenceFrankfurt am Main, November 26, 2003

2

Contents

Overview

Investment strategy in German speaking countries

Investments abroad

Fund management

Financial year 2002/2003 – Investments and disinvestments

Deutsche Beteiligungs AG – A good investment opportunity

Annex

OverviewMBO Fund management

Fiscal year 2002/03 AnnexIntern. activities

Summary

3

Deutsche Beteiligungs AG - Overview

40 years of private equity experience - More than 300 German mid-market

transactions

Remarkable success story- 16.3 % return on equity (p.a., 1992/93 to

2001/02)

Good market position - Capital requirements for further investments

Listed since 1985- 3 principal investors (45 %)- Free float 49.92 %- Market capitalization ~ €170 mn



Summary

4

Focus on management buyouts- Direct buyout investments in German-

speaking countries- Foreign buyout investments through

experienced fund partners- Growth financings (minority

investments) in exceptional cases only

Fund management- Fee income for cost coverage- Access to larger transactions through

additional financings (“parallel funds”)

Business activities

40.5 %

21.7 %

37.8 %



Summary

5

Plant and machine

construction

Automotive supplies

Building Industry

Chemicals

Print, media, packaging

Industrial services and

logistics

Consumer goods

Other

Trade

Well-balanced portfolio

Status: Acquisition costs, Date: October 31, 2003



Summary

6

Focus on MBOs –Investment criteria

Mid-market businesses / Group subsidiaries- Old economy industry, industrial

service sectors- Turnover up to €750 mn p.a.- Proven management

Leading market position

Profitable, with growth potential

Transaction value €50 – 250 mn



Summary

7

Case study Casco: How Deutsche Beteiligungs AG builds value

Company- World market leader in the

development, manufacture and marketing of impregnated foils and other surface materials for floorings, furniture, and construction industry

- Sales (2002) €265 mn928 employees in eight countries

Investment- Management buyout led by Deutsche

Beteiligungs AG, jointly with US-Partner

- Investment €12.4 mn



Summary

8

Casco Surfaces GmbH

Build value through- Internal growth potential- Development of new markets (Brazil,

South East Asia)- Launch of new, high-margin products- Earnings enhancement by optimizing

product mix and improving cost structure in Europe (site optimization)

Exit opportunities- Trade sale to buyer, in whose process

chain Casco fits- IPO



Summary

9

Case Study Sebaldus: How Deutsche Beteiligungs AG built value

Company- Major German media business, four categories:

Publishing, Printing, Direct Marketing, Electronic Media

- Turnover (1997) €476 mn, 3,700 employees

Outset

- Increasing competition, market position attacked

- Group of 196 shareholders with different objectives

- No capital for growth

Investment- MBO in August 1997 (jointly with other finance

investors)- Investment €16.7 mn



Summary

10

Sebaldus AG

Growth in value through focus on core businesses- Core business Printing:

- add-on acquisition- new printing press

- Core business Publishing:- acquisition of majority in Austrian publisher Metro- IPO for Computec Media AG

- Business field Electronic Media soldExit

- Printing and Direct Marketing activities sold to Schlott AG in December 1999

- Publishing activities sold to WAZ Group in November 2000

Invested capital tripled



Summary

11

average yrs. of private-equity experienceat DBAG

4 Principals > 12

7 Directors > 8

10 Investment Managers> 5

Management remuneration with strong incentive system

- Carried-interest scheme installed in 2001

- Investment team must co-invest to profit from performance of investments

Experienced investment team



Summary

12

Three out of four German deals through proprietary channels

Excellent network provides proprietary deal access- Avoids costly

auction bids- Greater deal

probability

Investments in German-speaking countries 1996-

2003 (24)

3

4

65

3

3

DBAG Partners Direct contactsDeutsche Bank M&A AdvisorsExecutive Circle Portfolio



Summary

13

Deal activity Germany – transaction value € 50 – 250 mn

Deutsche Beteiligungs AG…

… 2002 involved in the completion of two transactions,

… 2003 in the completion of three transactions

10

13

12

10

15

1211

6

32 2

5

0

200

400

600

800

1.000

1.200

1.400

1.600

1.800

2.000

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003*

mn €

0

2

4

6

8

10

12

14

16

Value (mn €)Number

* Jan. to Oct.



Summary

14

Growth drivers for mid-market deals

Key growth driver:Spin-offs of non-core activities by large corporations

Other growth drivers:- Regulatory pressure on banks to cut back

on lending (Basel II)- Succession issue for family-owned

companies Positive mid-market development



Summary

15

Portfolio diversification through international investments

Fund partnerships benefit business in German speaking countries

- Cross-border deals (Casco Surfaces)- Additionally: Portfolio diversification

Comparable investment criteria

Collaboration with experienced partners- USA: Harvest Partners- Austria: Unternehmens Invest AG

(UIAG)- France: Quartus Gestion



Summary

16

Fund IV: €228 mn committed – largest equity-raising program to date

Fee income for cost coverage

Investment ratio Deutsche Beteiligungs AG / DBAG Fund IV 1:2

New equity financing - Investors confide in the team

Deutsche Beteiligungs AG

Fund I & II Fund IV Fund III

1998 2002



Summary

17

Financial year 2002/2003 – Difficult environment

Exit markets remain difficult- Strategic investors (trade sales)

restrained- Financial investors a stable pillar- IPOs not possible

No economic growth- Challenge for portfolio companies

But: Attractive investment opportunities- Restructuring of "Deutschland AG"

(Corporate Germany)- Capital markets pressuring large

conglomerates Invest anticyclically



Summary

18

Profitable exits despite market weakness

Edscha AG – Secondary BuyoutInvestment: October 2000Exit: November 2002 – IRR: > 25 % p.a.

Andritz AG – Secondary PlacementInvestment: December 1999Exit (82 %): June 2003 – IRR: invested capital doubled, > 20 % p.a.

Global Power Equipment Group Inc. – Stock ExchangeInvestment: August 2000Exit (> 50 %): July 2003 – IRR: invested capital doubled, > 20 % p.a.

Value growth realized



Summary

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Financial year 2002/2003 – Nine-months’ results

Balanced quarterly result- Sales proceeds largely consumed by

valuation adjustments- Weak US economy

=> Valuation adjustments on three portfolio companies and one fund investment

- Other operating income significantly above previous year's level

- Management fees- Structuring fees- Appreciation in value

Outlook: Balanced total result- Significant improvement vs. previous

year



Summary

20

Recent investments

Casco Surfaces – Management buyoutInvested in July 2003Chemicals – Investment €12.4 mn

Preh-Werke – Management buyoutInvested in November 2003Automotive supplier – Investment €12.8 mn

BBS – Management buyoutInvested in November 2003Industrial services – Investment €10.0 mn

Strong market position



Summary

21

Shareholder profile

Free Float49.92 %

Vermögensverwaltung Wilhelm von

Finck15 %

Gerling Group15 %

Deutsche Bank AG

15 %

Kreissparkasse Biberach5.08 %



Summary

S-Dax indexed

Free float enlarged to 49.92 %- Market capitalization of free float ~

€84mn

22

Share price



Summary

0

2

4

6

8

10

12

14

1.11.02 1.1.03 1.3.03 1.5.03 1.7.03 1.9.03 1.11.03

S-Dax (indexed)

DBAGDax (indexed)

euros

23

Shares trade at book-value level



Summary

0

5

10

15

20

25

30

35

40

45

50

Dec-85

Dec-86

Dec-87

Dec-88

Dec-89

Dec-90

Dec-91

Dec-92

Dec-93

Dec-94

Dec-95

Dec-96

Dec-97

Dec-98

Dec-99

Dec-00

Dec-01

Dec-02

in €

Equity per ShareShare Price

24

Private equity outperforms other asset classes

Private equity returns over 10-year period: 15 percentBase: 196 European buyout funds, Horizon IRR 1993 to 2002

Private equity returns higher than other asset classes

Source: Pan-European Performance Study, EVCA, March 2003

0.0%

4.0%

8.0%

12.0%

16.0%

Private equityEuropean stocks

Fixed-interest bearingsecurities

16.3%

Deutsche Beteiligungs AG

14.8%

6.0%7.0%



Summary

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- Deutsche Beteiligungs AG founded in 1965

Long-established brand name

Track record

Diversification

Experience- … in managing economic and market

cycles- Ability to realize exits- Benefit of network – access to deal flow- Disciplined investment process

- Broad, balanced portfolio of assets

- av. pre-tax 1 year - 9.3 %ROE p.a. 3 years 7.4 %

5 years 18.2 %10 years 16.3 %

Deutsche Beteiligungs AG – a good investment opportunity



Summary

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Valuation rules ofInternational Accounting Standards

Valuation principles based on IAS rules

Valuation based on- Stock market prices- Purchase offers- Comparable transactions- Multiples method (e.g. peer group

comparisons)- ”Sum of the Parts“ assessment



Summary

28

Shareholders’ equity

Total shareholders' equity (net of dividend)

92108

173 172156 156

0

20

40

60

80

100

120

140

160

180

200

Oct. 31,1998

Oct. 31,1999

Oct. 31,2000

Oct. 31,2001

Oct. 31,2002

Jul. 31,2003

mn euros



Summary

29

Investments

Investments (cost or lower)

211231

252

291270 259

0

50

100

150

200

250

300

350

Oct. 31,1998

Oct. 31,1999

Oct. 31,2000

Oct. 31,2001

Oct. 31,2002

Jul. 31,2003

mn euros



Summary

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Result from investment activity

Result from investment activity *

5551

61

28

19 17

0

10

20

30

40

50

60

70

1197/98 1998/99 1999/00 2000/01 2001/02 2002/03

mn euros

**

Consolidated as of FY 2001/02* Before write-offs and provisions ** First 3 quarters



Summary

31

Net income/loss

Net income/loss

21

3832

9

-16

0

-20

-10

0

10

20

30

40

50

1997/98 1998/99 1999/00 2000/01 2001/02 2002/03(3rd qrt.)

mn euros

* **

* consolidated



Summary

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Typical investment structure

Target company

DBAG Fund IVDeutsche

Beteiligungs AG

60 %10 %

1

Management of target company

2

30 %

:

1 % investment by carry team ofDeutsche Beteiligungs AG



Summary

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Ten largest investments represent 61 % of book value

Company Date of investment

mn €

Sector

Bauer AG 09/96 27.6 Special construction

Lignum Technologie AG

01/97 22.6 Wood processing machinery

schlott gruppe AG 12/99 17.4 Media systems provider

Harvest Partners Intl. III

10/97 16.7 US fund

Hörmann KG 05/97 13.7 Industrial services

Harvest Partners Intl. IV

04/01 12.6 US fund

Casco Surfaces GmbH 07/03 12.4 Basic materials

AKsys GmbH 12/01 12.1 Automotive supplier

Lund Intern. Holdings Inc.

09/97 11.2 Automotive accessories

Hucke AG 02/95 8.4 Apparel

Status: July 31, 2003



Summary

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Company Date of exit

Kind of disinvestment

Andritz AG 06/03 Secondary placement

Computec Media AG

03/03 Secondary buyout

Edscha AG 11/02 Secondary buyout

Rheinhold & Mahla AG

06/02 Trade sale

Hawe KG 05/02 Sale to majority shareholder

AvK/SEG Holding KG

10/01 Trade sale

Libro AG 07/01 Trade sale

Vitas Inc. 04/01 Repayment

Rockinger KG 03/01 Trade sale

Jeschke GmbH 03/01 Trade sale

Most recent ten exits – DBAG not dependent on IPOs



Summary

35

Financial calendar 2004

Annual Press Conference 2002/2003

January 29, 2004

Analysts‘ Conference Call January 29, 2004

Annual Meeting and 1st Quarter Report

March 18, 2004

Analysts‘ Conference Call March 18, 2004

2nd Quarter Report June 14, 2004

Analysts‘ Conference Call June 14, 2004

Analysts‘ Conference June 2004



Summary

36

Creating a new Mittelstand

Stock abbreviation: Reuters: DBAG.FBloomberg: DBA

ISIN code: DE0005508105

Stock market trading with official listing in PRIME STANDARD

Indices: S-DaxC-Dax-Industrial

For more information: www.deutsche-beteiligung.comDeutsche Beteiligungs AG Investor RelationsKleine Wiesenau 1 Thomas Franke60323 Frankfurt am Main Tel.: +49 (69) 9 57 87-3 07Tel.: +49 (69) 9 57 87-01 Fax: +49 (69) 9 57 87-3 91

e-mail: [email protected]



Summary

37

Cautionary statement regarding forward-looking statements

This presentation contains forward-looking statements. Forward-looking statements are statements that are not historical facts, including statements about our beliefs and expectations. Any statement in this presentation that states our intentions, beliefs, expectations or predictions (and the assumptions underlying them) is a forward-looking statement. These statements are based on plans, estimates and projections as they are currently available to the management of Deutsche Beteiligungs AG. Forward-looking statements therefore speak only as of the date they are made, and we undertake no obligation to update publicly any of them in light of new information or future events.

Forward-looking statements involve inherent risks and uncertainties. A number of important factors could therefore cause actual results to differ materially from those contained in any forward-looking statement. Such factors include the conditions in the financial markets in Germany, in Europe, in the United States and elsewhere from which we derive a substantial portion of our business.OverviewMBO Fund

managementFiscal year 2002/03 AnnexIntern.

activitiesSummary

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