Foreword by the editor

Due dili­gence of the status quo

We are in the midst of struc­tu­ral chan­ges that are resha­ping our world. Private finan­cial inves­tors are in a unique posi­tion to bene­fit from these Mega­Forces, also known as the 4 D’s — digi­ta­liza­tion, decar­bo­niza­tion, deglo­ba­liza­tion and demo­gra­phic change! Speci­fi­cally, these include digi­tal disrup­tion and arti­fi­cial intel­li­gence, the tran­si­tion to a low-carbon economy inclu­ding new supply chains, demo­gra­phic diver­gence, the future of finance and geopo­li­ti­cal frag­men­ta­tion world­wide. Whether it’s the importance of infra­struc­ture in the tran­si­tion to a low-carbon economy or the role of real estate as society adapts to demo­gra­phic change, private capi­tal is always essen­tial. The Mega­Forces that are resha­ping our world are also the basis for many of the oppor­tu­ni­ties in the various private asset clas­ses. — Contin­ued vola­ti­lity and stub­born infla­tion have made it clear that infra­struc­ture cash flows are resi­li­ent, espe­ci­ally as infra­struc­ture assets are inher­ently less cycli­cal than other asset clas­ses. — Private debt conti­nues to grow. Howe­ver, the higher cost of capi­tal is having an impact. — The high inte­rest rates are rele­vant for private equity. This is because compa­nies with capi­tal requi­re­ments tend to finance them­sel­ves more through equity. On the other hand, low tran­sac­tion volu­mes are crea­ting an attrac­tive envi­ron­ment for buyers on the secon­dary market. — In the real estate market, valua­tions are reco­ve­ring again and attrac­tive oppor­tu­ni­ties may arise in various real estate sectors, inclu­ding indus­trial and logi­stics proper­ties, retail proper­ties and certain types of resi­den­tial proper­ties. We see digi­tal disrup­tion and hear daily about the so-called arti­fi­cial intel­li­gence (AI) tech­no­lo­gies that are chan­ging the way we live and work — one of the mega forces shaping the new regime of macroe­co­no­mic and market vola­ti­lity that is still diffi­cult to assess. We are seeing the entire tech­no­logy indus­try — led by a handful of large tech compa­nies — shif­ting more of its busi­ness focus to AI. As an asset class, infra­struc­ture is curr­ently booming. Long-term struc­tu­ral trends are likely to bene­fit infra­struc­ture assets in the coming years and deca­des. The world is in a tran­si­tion phase, the energy system needs to be repo­si­tio­ned and invest­ments are needed in all sectors to decar­bo­nize the economy. The global expan­sion of digi­tal infra­struc­ture is driving demand for fiber optic networks, cell towers and data centers. Supply chains are also being ques­tio­ned and recon­nec­ted. This is because geopo­li­ti­cal frag­men­ta­tion is acce­le­ra­ting the trend of brin­ging entire sectors back to the dome­stic market or its peri­phery. This results in new oppor­tu­ni­ties and new invest­ment targets in logi­sti­cally important infra­struc­tures such as the rail network, ports or logi­stics centers. Private debt conti­nues to grow and is beco­ming an important asset class for many long-term investors. 

With a total volume of more than USD 1.6 tril­lion world­wide (as at Decem­ber 2023/source: Prequin), private debt accounts for around 12% of the USD 13 tril­lion alter­na­tive invest­ment universe. The market in which inves­tors can invest in private debt has grown consider­a­bly over the last ten years, mainly because banks and public lenders are gran­ting fewer and fewer loans to SMEs. Today, inves­tors are incre­asingly turning to private debt in order to secure income opti­ons with medium-sized compa­nies. The higher cost of capi­tal is likely to affect indi­vi­dual sectors and compa­nies differ­ently in the coming year. Private equity is in a tran­si­tio­nal phase amid higher inte­rest rates and growing market uncer­tainty. Nevert­hel­ess, the outlook is posi­tive, as the asset class has regu­larly shown above-average perfor­mance in times of vola­tile markets in the past. And there are curr­ently also indi­ca­ti­ons that attrac­tive oppor­tu­ni­ties could arise for well-funded private equity inves­tors in the near future. The follo­wing issues are charac­te­ristic of the new envi­ron­ment: rising inte­rest rates, infla­tio­nary pres­sure, econo­mic and geopo­li­ti­cal uncer­tainty and fears of a correc­tion on the public equity markets have slowed tran­sac­tion acti­vity. This and the stagna­tion on the stock markets are reflec­ted in lower valua­tions. Private equity compa­nies are turning their atten­tion to add-on acqui­si­ti­ons and are incre­asingly taking advan­tage of lower share valua­tions to carry out going-private tran­sac­tions. The lower avai­la­bi­lity and higher costs of debt capi­tal have forced private equity compa­nies to provide more equity for tran­sac­tions. — Not only have tran­sac­tion closings slowed down, but exits in parti­cu­lar. This has resul­ted in an envi­ron­ment in which capi­tal has been called up quickly, but distri­bu­ti­ons have not been able to keep pace. In the maga­zine section of our 22nd issue this year, you can expect eight promi­nent authors with exci­ting and new topics from the finan­cing and corpo­rate finance indus­try. — Dr. Jürgen Michels (BayernLB) sheds light on the status quo and outlook for the economy in Europe. He will also be keeping an eye on poten­tial geopo­li­ti­cal deve­lo­p­ments follo­wing the US elec­tions. Simon Frank and Lara Lorenz (Pictet Asset Manage­ment) will explain in great detail thema­tic invest­ments in private envi­ron­men­tal tech­no­logy compa­nies and the growth pros­pects they offer, inclu­ding ELTIFs, which now also offer private inves­tors regu­la­ted and trans­pa­rent access to these invest­ments previously reser­ved for profes­sio­nal inves­tors. The trans­for­ma­tion of the logi­stics indus­try has acce­le­ra­ted massi­vely in recent years. Dr. Michael Rolle (DHL Supply Chain) explains the attrac­tive invest­ment oppor­tu­ni­ties and levers for value enhance­ment that are curr­ently available in this sector with private equity. — Compa­nies with an affi­nity for risk can curr­ently acce­le­rate their further deve­lo­p­ment by purcha­sing compa­nies as part of a distres­sed M&A process. Carl-Jan von der Goltz (Maturus Finance) explains how you can use purchase price finan­cing via asset-based models. 

Cyber­se­cu­rity is incre­asingly a reason for signi­fi­cant opera­tio­nal and finan­cial risks for entire compa­nies. Gerhard Stei­nin­ger and Mirko Ross (asvin) explain why the topic of cyber­se­cu­rity should be firmly ancho­red in due dili­gence proce­du­res. — If an entre­pre­neur wants to sell his company successfully, he should be well prepared. To do this, they need a road­map. Dr. Willem Keij­zer (CNX Tran­sac­tion Part­ners) explains how exit readi­ness maxi­mi­zes company value. Inves­t­ing with IMPACT is an important goal for many inves­tors. Prof. Dr. Timo Busch (Univer­sity of Hamburg), Eric Prüß­ner (AIR) and Hendrik Brosche (Univer­sity of Hamburg) will answer nume­rous open ques­ti­ons on measu­ring the impact of impact invest­ments for the first time. — First of all, leader­ship quality has nothing to do with a leader­ship posi­tion. What are the leader­ship quali­ties of a super­vi­sory board? An intro­duc­tion by Prof. Dr. Peter Fankhau­ser (Manres). The FYB 2025, in its 22nd edition, conti­nues to enjoy great popularity. 

You will also find entries of foreign PE compa­nies that want to be present in the FYB Finan­cial Year­Book and on the German market. We offer you an over­view of PE and VC firms, private debt and mezza­nine provi­ders, fund of funds, compe­tent law firms, as well as corpo­rate finance specia­lists, corpo­rate and HR consul­tants and networks, etc. — FYB 2025 will conti­nue to be the leading refe­rence work for alter­na­tive finan­cing in Germany. Yours sincerely,
Tatjana Anderer