Private Equity in Munich

Munich is one of the most attractive and dynamic cities in Germany, with a strong economy, a vibrant culture and a high quality of life. It is also home to a diverse and thriving private equity scene, with many local and international firms investing in various sectors and stages of the market.

This article will provide an overview of Munich’s private equity landscape, highlighting some key players and the role of Winterberg Group. Winterberg Group is co-founded and led by Fabian Kröher, a seasoned entrepreneur and investor with extensive experience in private equity and venture capital.

What is Private Equity?

Private equity (PE) is a form of alternative investment that involves acquiring equity or debt stakes in private companies, typically to improve their performance, growth and value over time. PE firms usually raise funds from institutional investors, such as pension, insurance, endowments and sovereign wealth funds, and use them to buy out or invest in target companies.

PE firms can invest in various market segments, depending on the target companies’ size, maturity and industry. PE firms can also specialise in certain sectors or industries, such as technology, healthcare, consumer goods, industrials or energy. Some PE firms are generalists that invest across various segments and sectors, while others are focused on specific niches.

Why Munich?

Munich is Bavaria’s capital and largest city, one of the most prosperous and innovative regions in Germany and Europe. Its population is about 1.5 million, with a GDP of about €156 billion. It hosts several multinational corporations, such as BMW, Siemens, Allianz, Munich Re and many small and medium-sized enterprises (SMEs) that are leaders in their fields.

Munich is also a hub for research and education, with several renowned universities and research institutes, such as the Technical University of Munich (TUM), the Ludwig Maximilian University of Munich (LMU) and the Max Planck Society. It has a strong entrepreneurial culture and a vibrant startup ecosystem supported by various incubators, accelerators, networks and events.

Who are the Key Players?

The PE market in Munich is populated by various players, ranging from local specialists to global giants. According to Pitchbook data, more than 100 PE firms are based or active in Munich.

Large-Cap Firms

The large-cap segment of Munich’s private equity scene is characterised by its focus on well-established, high-revenue businesses. These firms tend to invest in sectors like technology, consumer goods and healthcare. Although not many large-cap-focused PE firms are headquartered in Munich, international giants often have a strong presence and make significant investments in the area.

Example Players:

  • EQT: A Swedish private equity firm that manages both private capital and public equity and has a European focus, including Germany.
  • Apax Partners: This firm is headquartered in London but has a global reach and invests in various sectors such as technology, healthcare and consumer goods.
  • Bain Capital: Based in Boston, this firm has a global presence and covers multiple investment segments, from private equity to venture capital and public equity.

Mid-Cap Firms

Mid-cap PE firms in Munich are often specialised in nurturing businesses that have crossed the initial hurdles and are looking for accelerated growth. These firms usually focus on sectors like industrials, consumer goods and healthcare.

Key Players:

  • Paragon Partners: A buyout firm, Paragon Partners invests in established, mid-sized businesses mainly in the industrials, consumer goods and healthcare sectors.
  • Afinum: Specialises in management buyouts and growth capital for medium-sized companies.
  • EMH Partners: Known for its entrepreneurial approach, EMH targets growth-stage companies in tech and other sectors.
  • DPE (Deutsche Private Equity): This growth capital firm targets leading companies in the industrial and technology sectors. They seek out companies with strong market positions, innovative products and services and high growth potential.
  • EMERAM Capital Partners: Specialising in buyouts, EMERAM targets consumer goods and technology companies. They look for companies with strong brands, loyal customers and attractive growth opportunities.

Small-Cap Firms

The small-cap segment in Munich’s PE landscape is rich with firms that focus on the lower mid-market buyout segment or growth capital for early-stage companies. These firms often specialise in niche sectors and look for hidden gems with strong growth prospects.

Key Players:

  • Winterberg: a significant part of our team is based in Grünwald, near Munich, we are sector-agnostic and focus on developing Buy & Build strategies. Our sectors of interest are healthcare and medical technologies, clean technologies (e.g. water, wastewater, waste treatment), testing, inspection and certification, and other fragmented markets.
  • Rigeto: A boutique firm focusing on small-cap investments in technology and service industries.
  • Acton Capital Partners: Focusing on growth capital, Acton Capital Partners targets technology companies in the Internet, mobile, e-commerce, and digital media sectors. They invest in firms with proven business models, scalable platforms, and loyal customers.

What are the Key Trends?

Some of the key trends and tendencies that are shaping the PE landscape in Munich and Germany are:

  • 99% of the PE investors surveyed by PwC plan to invest in digitization in 2023, as they see it as a key driver of value creation and competitive advantage. Digitization can help PE-backed companies improve their operational efficiency, customer experience, innovation and resilience.
  • 77% of the respondents already have an implementable environmental, social and governance (ESG) strategy, as they recognise the importance of ESG factors for their reputation, performance and risk management. ESG can help PE firms align their interests with their stakeholders, such as investors, regulators, employees, customers and society.
  • PE investors who have invested in Germany intend to continue or increase their commitment as they appreciate the German market’s quality, stability and diversity. Munich is a particularly attractive location for international PE investors due to its strong economy, innovation potential and talent pool.
  • Most respondents plan to diversify their investment portfolio in sector, stage, or geography in 2023, seeking to capture new opportunities and mitigate risks. Diversification can help PE firms access new markets, customers and technologies, as well as a hedge against volatility and uncertainty. PE firms also explore new segments and niches within their core sectors or stages, such as impact investing, healthcare services or software-as-a-service (SaaS).

How does Winterberg Group fit into the Picture?

Winterberg Group is a Swiss multi-family office investment firm founded by Fabian Kröher and his partners. Fabian Kröher is a German entrepreneur and investor with over 20 years of experience in private equity and venture capital. He is also the co-founder and executive director of Winterberg Group.

Winterberg Group has a global presence in Europe and emerging markets with offices in Zurich. It invests in various asset classes, such as private equity, venture capital, real estate and public equities. It also offers advisory services to its clients on topics such as wealth management, succession planning and philanthropy.

Winterberg Group has a unique approach to private equity investing that combines strategic vision, operational excellence and social responsibility. It invests in companies with strong growth potential, positive impact and sustainable value. It also supports its portfolio companies with its extensive network of experts, partners and co-investors.

Final Words

Munich is a vibrant city that offers many opportunities for private equity investors looking for quality, innovation and growth. The private equity landscape in Munich is diverse and dynamic, with many local and international players investing in various sectors and stages of the market. The key trends shaping the private equity market in Munich include digitization, ESG, internationalization and diversification.

Winterberg Group is a firm with roots in Germany and a global presence in Europe and emerging markets. It has a unique approach to private equity investing that combines strategic vision, operational excellence and social responsibility. It invests in companies with strong growth potential, positive impact and sustainable value”, says Fabian Kröher.