Investment strategy

What we are looking for…

We are on track to diversify Haniel’s portfolio through further investments in the production and service sectors. We are looking for companies whose business models are sustainably profitable and can be further developed. We wish to support small and medium-sized enterprises in consistently tackling and successfully mastering the transformation needed to secure their future viability. When taking on a new business model, it is not simply a question of identifying interesting companies but also finding a management team that is capable of implementing a growth and internationalisation strategy. That is the basis for successfully cooperating with Haniel. In order to keep our aggregate risk low, we strive for a reasonable mix of portfolio companies with robust growth potential and those that deliver dividends. However, this takes time. We know that the task of optimising and further developing the portfolio is a permanent and continual one.

We use our investment filter to assess specific investment opportunities. We have a demanding set of criteria, and for each interesting company we examine whether there are specific criteria that we should potentially give somewhat greater or lesser weight to. We therefore apply a certain degree of flexibility and entrepreneurial prospects when assessing investment opportunities that add value. In addition, we regularly review our investment criteria and harmonise them with the requirements of our shareholders and our portfolio strategy.

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We generally strive for a majority interest in new companies, ideally a 100-per cent acquisition. But if there is an attractive business model that meets our filter criteria, we do not exclude taking a minority stake, for example if the owners are currently not yet ready to sell the company completely. In such a case, we aim to agree with our new partners on a future increase in our equity investment to a majority.

Companies that, for instance, produce or trade in arms are out of the question for us. Nor does Haniel invest in other traditional blacklisted areas such as gambling or narcotics. In general, we review potential investments in an early phase to see whether they meet our sustainability criteria. In concrete terms, we therefore do not consider companies whose products endanger the health of consumers, for example. Instead, we deliberately invest in companies which help to improve hygiene and produce healthy foods. In addition, we avoid technological bets and investments in research-intensive development pipelines.

We are looking for companies that have the prerequisites to play a role in the portfolio that generates or adds value. We therefore prefer business models that can be internationalised beyond the regions they currently cover.

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„We don’t think in quarters, but instead in generations.“

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We prefer companies with origins in cultures we are familiar with as well as those companies which already have a relevant presence in other countries, particularly in growth regions, or which demonstrate the potential for such development.

For us, it is important how we can meaningfully professionalise and further develop the business over the medium and long term. This means investments which might not pay off in just a few quarters but can generate an attractive return over the medium term. For this reason our focus is not on who we can resell the new portfolio company to in a few years‘ time.

We support companies from a more medium-size environment in continually improving their structures and processes. To do that, we analyse the relevant markets and identify strategic paths for further development. Together with the management, we search for acquisition targets and help to implement M&A processes. In addition, we offer companies support in developing the necessary expertise, for instance in relation to a digital transformation.

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„The task of further developing the portfolio is a permanent and continual one“

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Portfolio development is a continuous process in which the individual business model is reviewed for its future development potential in the course of its life cycle. When the capital requirements for the next step in internationalisation exceed our capability as a family equity investor, we have to look for a new owner. For this reason, we have separated from our longstanding majority investment in the pharmaceuticals wholesaler and retailer Celesio and found a successor investor with the necessary financial resources.

…and how we find it

Since we operate in a highly competitive environment, we use many channels and a variety of approaches to generate relevant investment opportunities. The fact that we are not merely a short-term provider of capital but rather a long-term family equity investor sets us apart from most of our competitors.

Scouting means that we systematically address interesting business models, which we select based on various criteria: these include growth rates, capital intensity, profitability and sector attractiveness. We prefer business models which are ideally bolstered by several megatrends. The need for a sustainable protein supply for a growing world population and the trend towards healthy nutrition have led, among other things, to our investment in the Norwegian company Optimar. As part of the scouting process, we draw up a shortlist of companies with whose owners we can hold a dialogue about their readiness to sell or their interest in working together in the context of an equity investment.

In addition to scouting, we maintain an in-depth dialogue with intermediaries, consultants and investors. In addition, we are in constant contact with the investment teams employed by the venture capital funds in which we invest. This affords us direct access to technological developments early on, and enables us to identify start-ups which might become relevant for our portfolio companies. In addition, we speak with larger companies which may be interested in selling off business activities in the context of a carve-out. Finally, we also like to use Haniel’s diverse family of shareholders to obtain tips on investment opportunities and be able to use their personal networks to address companies.

In principle, an acquisition can be called off at any stage of the transaction process. If issues arise in the course of due diligence that we cannot and will not accept, we invariably exit the process. Especially if it turns out that the management team does not truly want to work with us. Ultimately, we will withdraw from a tender process if we cannot come up with a competitive valuation, for instance because another interested bidder is able to pay higher prices due to potential synergies.

In addition to positioning the Haniel family as a family equity investor, we are above all interested in developing and expanding personal networks at different levels. This applies just as much to the members of the Management Board of the Holding Company and other representatives of our company as it does to the members of the management teams of our portfolio companies. We have much to offer: systematic human resources development, varied offerings from the Haniel Academy, the support of our digital unit Schacht One and access to our venture capital network.

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„We know from many company owners and management teams that we have a positive profile that stands out from the rest of the pack of interested investors.“

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In addition, the Holding Company works closely with the divisions, for example in improving strategic and operating processes. We also advise and support our portfolio companies in matters such as market evaluation, identification of potential acquisitions, financing, communication, and legal issues.

For the owners of family companies, the idea in particular that they can pass their life’s work on to a German company with a tradition such as Haniel’s is attractive. The Haniel family is regarded as a reliable and stable partner. The ability to continually reinvent itself and keep growing is also seen as a positive.

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