GERMAN PRIVATE EQUITY: SUPPORTING LOCAL BUSINESSES

 

By WILLIAM TELFORD, Business Editor


A SUBSIDIARY of Leipzig’s saving’s Bank is aiming to grow established SMEs by providing private equity funds.

And Stefan Leermann, managing director of the business financing specialist S-Beteiligungen, said the key to building a city’s economy is to identify and push successful small and mid-sized businesses to take the next step.

And he said the best deals for investors are to be found in the regions.

“The real interesting deals are in the regions, we pick an interesting company,” he said. “To a certain degree they are more open and the companies are more modern.”

S-Beteiligungen is a subsidiary of, and funded by, Sparkasse Leipzig, the regional savings bank.

It was set up 12 years ago and specialises in providing private equity support to growing businesses.

It doesn’t take firms over and investment is capped at 750,000 euros.

Anything above this, it has to offer the opportunity to another “vehicle” in the company, Mittelstand Sachsen (WMS), though the two can work together.

It also has another arm called Gruenderfonds Saxony (TGFS), which specialises in venture capital in technology start-ups to establish long-term viable businesses.

TGFS has 60million euros invested, WMS has 40million euros, and S-Beteiligungen 25million euros.

“We are looking at companies of two million to 2.5million euros, small businesses, we don’t finance early-stage start-ups, it’s too risky. We finance the second row,” said Mr Leermann (pictured). “We take a stake of five per cent in them.”

Mr Leermann said the sorts of growth companies he’s interested in are in sectors such as media, IT, logistics and automotive suppliers.

Medial and life sciences are seen as too risky, however, and left for TGFS.

“Last year we did anything connected with transportation, a new strategy,” he said.

“We have invested in a gearbox company; they raised some money to go to China.

“We have to go out to the companies, I have a data base and call companies, particularly where the owner is aged 60 to 65 plus.

“Or people come to us and say they are ready to invest and buy-in, so we find companies where the owner is ready to sell.

“Someone who bought a company from the old GDR, or has spent 20 years with a firm, is more likely to sell.

“We have 300 potential companies, that’s priority A, to be visited.”

But Mr Leermann doesn’t want to get enmeshed in too many firms because “preparing for exit is time consuming”.

Read more: http://www.plymouthherald.co.uk/Plymouth-Leipzig-private-equity-boost-SME-growth/story-21285757-detail/story.html#ixzz35eZCdqbW
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