Dear Friends and Business Partners of Afinum,
The past three months have been exceptional for all of us. We all have witnessed and had to adapt to circumstances that seemed unimaginable before.
While the economic damage resulting from Covid-19 and the enforced lockdown may be mitigated short-term by monetary and fiscal actions now in place or planned, the depth (and divergence) of views projecting how this may affect our economy and social behavior longer term are inexhaustible. This is why we wanted to keep this newsletter short and its message simple: A note of gratitude to you all, our management teams, our friends, and business partners.
Against this background, we wanted to briefly share some insights on how our team operated under these exceptional circumstances, not safe from errors, but continuously learning and adapting and with the benefit of our team history and spirit, spanning in total over more than 20 years and a variety of historic crisis and challenges.
In a time-phased, 3-step approach and in close collaboration with our management teams, we went from mitigating ad-hoc business and cash impact in Phase 1 (March/April) to a thorough analysis and definition of mid- to and long-term development scenarios in Phase 2 (April/May) to today (Phase 3): Our team has now re-directed capacities and focus to ensuring future value creation, monitoring and screening for strategic opportunities, add-on acquisitions, and new platform investments.
Our 3 Step approach March to June 2020
While going through the phases outlined above, we also reflected on socioeconomic trends and a possible rebalancing of our investment focus. Based on market research and sector analyses, we formed our internal Afinum view on some of the key structural trends (shown below).
Outcome of our internal Afinum market survey on Covid-19 mid- to long term implications
We feel very thankful for not just the unconditional commitment displayed by our management teams during this time, but were amazed by how traditional processes and habits were quickly adjusted or re-thought, minimizing harm to the businesses and working tirelessly towards best possible recovery. We wanted to pick out four examples, which we thought demonstrate this particularly well.
Tackling Covid-19 implications: Examples of how our portfolio companies adapt to the “new normal”
it Works, our independent out-of-home media and technology specialist, designed a special media tool called “match your fan” on the back of its own programmatic mobile marketing platform, acquired as part of an add-on acquisition in 2018. The media solution is offered in cooperation with sportfive, the global sports marketing and entertainment agency, enabling mobile targeting of users based on individual soccer club affiliation and geo location. Interest in the product exceeded all expectations, fueled by advertisers having to adjust media mix and strategy in times of enforced “ghost games”, i.e. in absence of physical fan audiences.
Zeit fuer Brot, our fast-growing premium organic bakery concept has weathered the crisis well and remained open for business throughout. Management expects no delay in achieving set roll-out goals for 2020 with new openings over the coming months currently scheduled for Frankfurt (Kaiserstr.36 and Schweizerstr. 32) and Berlin (Savignyplatz 9/10).
Garz & Fricke, the specialist for human machine interface solutions, has levered its hardware and software capabilities to develop – in record time – a vending machine for the touchless sale of hygiene products in collaboration with its customer Harting, a vending machine manufacturer. Garz & Fricke provides the control unit, the contactless payment system, and the software.
For all4golf, our golf equipment e-commerce platform, we have closed a highly strategic transaction in April in which we joined forces with the UK counterpart Clubhouse Golf, to form the clear pan-European leader for online golf equipment. The business has gained incredible traction over the past weeks as golf shoppers increasingly shifted to the online channel. While dealing with the increased pressure on outbound logistics with an “all hands” approach, the team has strategically managed its stock and developed own products to provide golf afficionados with special equipment to work on their handicap from home – accompanied by an entire series of related youtube videos.
Afinum – flexible structures for investments in entrepreneurial succession situations, realization of outstanding growth ambitions and corporate carve-outs
Afinum is currently investing its 6th fund generation with sufficient capital available for further add-on transactions and new platform deals. We are currently working on new platform deals with focus on resilient and attractive niches within sectors such as TMT, Healthcare, and Food & Nutrition, but also continuously seek further add-on transactions for our platform investments, among those Lemco Precision, Garz & Fricke and Liftket.
We stand ready as experienced, reliable, and flexible succession and growth investors to engage in discussions with current owners and business contacts to develop new partnership and deepen existing ones, working together to create and capture untapped value.