EX.TRA Industries Private Equity GmbH & Co. KG ("EX.TRA")

Transcription

1 Private Placement EX.TRA Industries Private Equity GmbH & Co. KG ("EX.TRA") - Control Investments in and Buyouts of Middlemarket Companies - Executive Summary for Institutional Investors 2004

2 Overview EX.TRA Management Asset Class Target Fund Size Target Portfolio Investment Period Minimum LP Commitment - Klaus Möllerfriedrich, Partner; - Frank N. Stolpmann, Partner; - Farzin Assayesch, Partner; - Markus Schmidt, Partner. Private Equity: Buyouts/Growth million. Approximately 12 growth-oriented and innovative middle-market companies in German speaking countries. 4-6 years. 5 million. Fund Life Up to 2011 to Fundraising Commencement Management Commitment Arrangement Fee Management Fees Participation in Proceeds Distribution Early Exit Opportunities Deal Flow Sponsor Immediately; first closing contemplated at 35 million. 1% of the fund capital and additionally 1% of the equity of each acquisition. One-time fee of 1% of committed capital. 2.4% p.a., declining by.2% p.a. after five years; additional reduction possible, if annual management costs are lower than budget. 1. Hurdle Rate: 8% per annum on invested capital. 2. Carried Interest: 80/20. Proceeds from dividends and sales will be paid out on an ongoing basis. Initial public offering of the entirety or majority of the portfolio as an alternative to selling investments individually. Proprietary deal flow already exists through an extensive network. Attractive investment opportunities for EX.TRA are expected to continue for some time. MITECH AG is a limited partner of EX.TRA. MITECH AG s shareholders include entrepreneurs and managers with extensive industry experience. The following executive summary is non-binding and reflects the current anticipated state of the fund s conception. Structural and tax changes up until the fund s closing might necessitate alterations. This summary of EX.TRA is not a solicitation for investment in EX.TRA Industries Private Equity GmbH & Co KG. Any basis for investment will be limited solely to the prospectus and investment documentation, which is available upon request.

3 Strategy and Investment Criteria - Summary and Key Investment Considerations - EX.TRA is based on the principle of "EXpansion on the basis of industrial TRAdition" within the middlemarket sector. EX.TRA will invest in established, innovative middlemarket companies that require additional management know how and equity to realize growth and succession opportunities. EX.TRA will follow on the success of GESCO Holding which was taken public successfully in 1998 by Klaus Möllerfriedrich. Highly Differentiated Approach EX.TRA will invest in companies with a proven track record. Early-stage investment opportunities will not be pursued. Target companies will be successful manufacturers or suppliers with revenues of typically up to 50 million in the following areas: automotive, medical technology, optical systems, electronics, energy and environmental technologies. EX.TRA will primarily seek to acquire majority stakes in its target companies, which will allow EX.TRA to influence the strategy and financing structure of its portfolio companies. The fund managers will actively direct the strategic decisions of target companies. In extended engagements, a "Value Task Force" of experienced interim managers will support the fund managers, and will participate in EX.TRA's success through MITECH AG. Where feasible, EX.TRA will seek to consolidate its portfolio companies into industry groups, helping to create market share dominance and economies of scale. As a limited partner ("LP") of EX.TRA, MITECH AG has access to 50 top entrepreneurs and managers. These entrepreneurs are shareholders of MITECH AG and will support the development of its investment portfolio by serving as special advisors, board members or interim managers. Additionally, they will help enhance deal flow through their extended network. The management teams of EX.TRA's portfolio companies will be required to materially invest in their respective companies. This will align incentives and help assure that mutually defined top and bottom-line goals are reached. In their previous capacities as managers and principal investors, EX.TRA's general partners have worked with numerous companies, which might present interesting current investment opportunities. This will help quickly ramp up strong and proprietary deal flow. EX.TRA will provide its investors with significantly higher operating and financial reporting transparency than is typical in the private equity industry. This will be accomplished by using proprietary portfolio controlling tools and integrated, documented strategic planning systems.

4 Favorable and Clearly Structured LP Investment Terms EX.TRA will invest million in approximately 12 companies, thus mitigating risk stemming from excessive portfolio concentration. The target return of each investment is estimated at a 25% IRR. The management fees of 2.4 % per annum are usual. Investors will receive a part of returns on EX.TRA Management profits, compared with its budget. Distribution of proceeds from portfolio companies to investors are anticipated from the outset. An early exit is foreseeable if the whole portfolio or a majority can be sold to a holding company or as public shares. Fund Structure EX.TRA Management GmbH, Düsseldorf Managing Shareholder MITECH Mittelstand +Technologie AG up to 5 million EX.TRA Industries Private Equity GmbH & Co. KG Volume: 130 million Insurance Companies Funds-of-Funds-/ Pension Funds/ Banks always > 50%* Investment A Investment B Investment n eventually together with financial investors Extraordinary Opportunity in German Middlemarket Acquisitions Numerous middlemarket businesses in Germany are operating with a relatively low equity basis. In view of the restrictive bank-lending environment since Basel II, more Mittelstand companies are turning to private equity investments as an attractive alternative to traditional bank financing. Through its holding company structure and long-term approach, EX.TRA is able to offer customized private equity solutions. This increases the opportunity to buy successful middlemarket and family-owned companies. The German Mittelstand offers significant opportunities to purchase strong performing companies at valuations not seen with larger deals.

5 In many cases, only new financial and management solutions, such as those created through a buyout, will be able to bridge the succession problems in the German middlemarket segment. The German Industry Association anticipates increased deal flow triggered by succession issues in Mittelstand companies in the upcoming years. Expected Management Successions in the Middlemarket Sector (Classified by Company Size) 60 Number of Companies in % Sale of companies in % External MBO in % Employees/MBO in % Company Size in Number of Employees The competitive and independent nature of entrepreneurs in the Mittelstand often obstructs potentially synergistic mergers or alliances with companies within a given industry. By selling their companies to EX.TRA, those entrepreneurs will be able to leverage previously untapped growth opportunities. Competitive dynamics will force manufacturing companies in technology to consolidate, which will support acquisitions and promote new equity infusions. Middlemarket companies are relatively straightforward to manage and, therefore, lend themselves to hands-on management by EX.TRA to implement a value driven strategy, refine company operations, and improve cost structure. Smaller undervalued publicly listed companies present another attractive investment opportunity, not only due to depressed financial markets. EX.TRA management has conducted pre due diligence on over 30 companies to date. As such, some intriguing opportunities are currently available to EX.TRA for a certain period of time. Competition for EX.TRA is limited. Most competitors, mainly Anglo-American private equity funds, focus on restructuring larger company units and use financial engineering to create value. These firms typically do not have access to the German Mittelstand and cannot relate to them.

6 Clear and Focused Investment Criteria EX.TRA will target middlemarket companies with revenues of up to 50 million, preferably located in the German speaking countries. EX.TRA will invest in manufacturers that produce future-oriented products with a unique value proposition. EX.TRA will invest in companies with positive and growing EBITDA. EX.TRA will focus on growth sectors with a significant innovation component. Many segments of the micro system technology industry, for instance, offer exceptional growth potential. Applications and Revenues in the Micro System Technology Sector Continue to Grow Revenues in $ billions IT-Periphery Bio-Medicine Automotive Appliances Telecomm. Source: NEXUS Because EX.TRA will invest in established companies, the risk of liquidation for any specific portfolio company will be low. Strong Management Team with Significant Track Record Members of the EX.TRA team have a collective track record of more than 20 private equity transactions, including initial public offerings. They also draw on solid management experience from a broad array of industry and portfolio companies, private equity funds and M&A advisory firms. 1 1 As of today these are: ABN AMRO Capital, Befesa S.A.; BHF Bank AG, B.U.S. Umwelttechnik AG; Capiton AG (Private Equity of Gothaer Insurances); Deutsche Bank, middlemarket-m&a; EnBW AG; Gesco AG; Landesbank Hessen-Thüringen (Helaba), High Tech Private Equity GmbH (ERGO Group); Innotec AG; Steag-microparts GmbH ; Valeo S.A. as well as 3i, plc.

7 EX.TRA will guide and manage its portfolio companies far closer than is the convention for typical private equity firms. Through close personal contact with all management levels at its portfolio companies, EX.TRA anticipates being involved in all significant decisions. EX.TRA's management will personally invest up to 2.6 million in the EX.TRA fund. Additionally, MITECH shareholders will invest up to 5 million. The pre-acquisition due diligence is highly structured, and will particularly focus on the strategic position of the company, its growth potential and possibilities to lower costs and improve productivity. Prior to acquisition, EX.TRA will also evaluate whether portfolio companies can be merged or if the company will need to make further acquisitions. Organisation The partners of EX.TRA are responsible for the management of transactions and for portfolio controlling. They are supported by a "Competence Team" of industrial experienced managers and entrepreneurs that are organized as member of the Investment Committee, a Value Task Force or as shareholder of MITECH AG. 2 They will act temporarily as advisors or interim manager of portfolio companies. Responsibilities inside the EX.TRA Management GmbH Management Competence Team Partner/MP Value Task Force (special areas) Investment Committee MITECH AG Shareholder Deal Flow Transaction Management Portfolio Controlling Consulting/ Industrial Know How Interim Management Exit 2 Shareholder of MITECH AG are up to 50 entrepreneurs/top manager: i.e. Dr. W. Priemer, machinery; H. Coen, automotive industry; K. Würtz, banking; P. Strohmaier, automotive industry (Findlay); K. Ackermann, automotive industry (Johnsons control); H. Lux, tool kits, DIY-chain; U. Weinert, electronics; B. von Polheim, GE medical; Dr. J. Klingele, paper and glue industry; T. Eggers, CPA; W. Neupert, Corporate Design; Prof. Dr. R. Krüger, investment banking (Lazard); A. Schürmann, trade chain; J. Hinrichs, trade chain; H. Teicke, financial services (AWD).

8 EX.TRA Management Biographies Klaus Möllerfriedrich is partner of EX.TRA. In this role, he oversees all due diligence and tax matters. Prior to joining EX.TRA, Klaus was founding partner and CEO of a chartered accountant firm and served as president of the international CPA group INTERAUDIT S.A.. In 1989, he founded GESCO AG ( and took the company public in 1998 as an industry holding (revenues: 170 million) with consistent returns. Klaus currently serves as member of the supervisory board in numerous family-run companies. Born in 1947, Klaus holds masters degree in business from the Universities of Cologne and Paris and holds the chartered accountant and tax consultant designation. Frank N. Stolpmann serves as partner of EX.TRA. In this role, he is responsible for overseeing investments and managing all fund operations. Previously, Frank worked as fund manager of High Tech Private Equity GmbH (ERGO Insurance, fund volume 150 million) where he was instrumental in the entire fund raising process and the company s organizational set up. He was also managing partner of a Deutsche Bank subsidiary responsible for M&A and strategy consulting for family businesses. Prior to that, Frank was managing director of MASA-Decor GmbH (furniture supplier, revenues: 110 Mio.). Additionally, he held the position of managing partner of Dr. Radermacher Techno Consult and served as project manager of Siemens AG. Frank is a board member in numerous family-run businesses. Born 1961, he holds a business degree from the University of Cologne and completed the Senior Executive Program (SEP) at Columbia Business School, N.Y. Klaus and Frank worked together several years within the Morison group (where Deutsche Bank Group and Interaudit were members) on succession tasks. Both founded EX.TRA in 2002 and appointed Farzin and Markus as equal partners. Frank and either Farzin or Markus have been working together on diverse M&A-projects. Farzin Assayesch is partner of EX.TRA. His responsibilities include deal sourcing and transaction management as well as creating value in the portfolio companies. As managing director of ABN AMRO Capital Farzin was responsible for establishing and developing the Private Equity activities of the group in Germany, Austria and Switzerland. Prior to that he served as senior vice president and head of corporate finance/acquisition finance at Landesbank Hessen-Thüringen (Helaba) and as vice president Private Equity at BHF- BANK AG. Born in 1952, Farzin holds two masters degrees, in engineering and business, both from the University (TH) Karlsruhe. Markus Schmidt serves as partner of EX.TRA. He is responsible for coordinating acquisition and sales transactions as well as for creating value in the portfolio companies. Previously, Markus was regional office director at Capiton AG, the Private Equity division of Gothaer Insurance. Prior to Capiton, he held a position as portfolio controller at EnBW AG, a leading German utility conglomerate. Born in 1967, Markus holds a masters degree in business and engineering from the University (TH) Karlsruhe.

9 Members of the Value Task Force and the Investment Committee Peter F. Strohmaier is member of the EX.TRA Task Force responsible for achieving growth projections. He is a successful entrepreneur (EMPE GmbH) and served as top manager in the automotive industry (Emishaft, EMPE, Findlay, Valeo). Peter draws on his extensive expertise in international business, especially the US-market und sophisticated cost management. Born in 1945, he holds a masters degree in business. Dr. Lutz Becker is member of the EX.TRA Task Force responsible for reaching marketing and distribution goals. He has many years of experience in IT, media, consumer markets and the electronic industry (Philips, Norman Data Defense Systems, etc.) and as lecturer for marketing at the University of Wuppertal. Born in 1957, Lutz holds a masters degree in economics. Dr. Wolfgang Priemer is member of the EX.TRA Task Force responsible for restructurings in family-owned technology companies. He is a successful entrepreneur in mechanical engineering and has significant experience with integration of acquisitions and internationalisation. Born in 1939, Wolfgang holds a masters degree in business engineering. Martin Meurer is member of the EX.TRA Task Force responsible for the implementation of leading edge financial and reporting systems. He gained extensive experience as CFO building the public B.U.S. Umweltechnik AG group with 16 subsidiaries where he successfully led the IPO of a portfolio company in Spain. Formerly, he held a management position in the institutional client services sector with Deutsche Bank AG. Born in 1963, he holds a masters degree in business from the University of Münster and completed the INSEAD Graduate SEP (senior executive program). Jochen Aymanns, born in 1941, is member of the EX.TRA investment committee. He gained extensive experience as CEO of leading german insurance companies. (Gerling Lebensversicherung AG; Gerling Holding, DKV, Nordstern, MLP) Dr. Reiner Wechsung is a member of the EX.TRA investment committee. He serves as managing director of Steag-microparts GmbH and is recognized as a leading expert in Europe in microsystems technologies. Born in 1942, Reiner holds a masters degree in physics. Udo Weinert, born in 1951, is member of the EX.TRA investment committee. He gained extensive experience with investments and IPOs as managing director of Berliner Elektroholding GmbH and CEO of Innotec Holding AG (public listed). Udo also served as interim executive with several electronic and holding companies and participated in bringing Euromicron AG public.

10 Contact Info: EX.TRA Management GmbH Schlossmannstrasse 14 D Duesseldorf (Germany) Tel investorrelations@extraindustries.de Klaus Möllerfriedrich Frank N. Stolpmann Farzin Assayesch Markus Schmidt