Gavin Wood
20 June 2017

Deutsche Beteiligungs – First MBO investment in Switzerland

Third investment by DBAG Fund VII within six months of the start of its investment period

Deutsche Beteiligungs (DBAG) has announced that it will invest up to €14m for a 22% interest in duagon, a Switzerland-based provider of network components for data communication in railway vehicles. The deal represents DBAG’s first management buyout (MBO) in Switzerland and the third MBO investment by DBAG Fund VII within six months of the start of its investment period. The €1bn DBAG Fund VII will be 20% invested following the transaction, which is expected to complete in July 2017.

The duagon MBO follows two €15m MBO investments that DBAG has already announced in 2017 – the acquisition of a radiology group in March 2017 and two parallel MBOs to form a convenience foods group in April 2017 – continuing the strong pace of new investment activity achieved over the previous two financial years. In addition to three investments agreed in FY16, which completed after the year-end, new investment in FY17 (year to 30 September 2017) has reached c €77m, which compares to an expected average run-rate of €60m pa. While duagon is DBAG’s first MBO transaction in Switzerland, it has already established a presence in Switzerland through its February 2016 expansion capital investment in mageba.

Founded in 1995 and based in Dietikon, Switzerland, duagon is an independent supplier of data communication network components, which are used by the majority of train manufacturers and systems suppliers. duagon’s products enable communication between individual sub-systems such as doors, brakes, air-conditioning units and the central processor via a train communication network (TCN). The components developed and produced by duagon are equipped with its proprietary software, which standardises individual data streams. This enables the operating status of railway vehicle systems to be monitored centrally by the train crew. duagon expects to generate revenues of more than CHF20m in 2017.

DBAG’s investment will support duagon’s international expansion and broader company development as it progresses along the path to becoming the independent market leader in communication solutions for on-board systems. DBAG sees duagon’s lasting customer relationships, broad technological expertise and strong competitive position in its niche market as an ideal platform for exceptional revenue and earnings growth.

Read Edison’s most recent research report on DBAG here.

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