Werner Vontobelarticle published on Infosperber on November 13, 2024, translated by Good for the head
In the United States, multi-billionaires buy elections or even the World Health Organization (WHO). In Switzerland, Christoph Blocher made the SVP the strongest party thanks to his money and Fredy Gantner, Urs Wietlisbach and Marcel Erni of the “Partners Group” have recently been trying to defeat the Bilateral III. They represent the new generation of super-rich. Unlike Blocher or Gottlieb Duttweiler, they no longer produce anything. Instead of goods, they just move money. And by hundreds of billions.
Business commerce as a business model
In the Sunday lookBeat Schmid tried to understand how the three founders of the private equity company Partners Group (PG) in Baar became rich together by around 8 billion francs in a few years. The short answer: collect money ($150 billion so far) from wealthy clients, buy companies with that money, and sell them for at least twice as much after five to ten years.
Wealthy clients can count on an annual net return of 15 to 20%. The three partners also receive management fees and hold private shares which have enabled them until now – again according to the Sunday look – to obtain a return on equity of 41%. So much for the financial surface.
But how did the three partners and their 1,900 employees make the purchased companies more efficient and double their value? THE Sunday look does not explain it precisely, and the Partners Group website does not say more. We find practically only arguments – and very abstract ones – at the level of financial markets. “Transformational Investment” – any questions?
The real economy is only mentioned marginally. But as luck would have it, the partners reached an important agreement at the beginning of this week. As we read on “Marketscreener”, Partners Group sold its stake in the company Techem with a profit margin of 45%.
In detail, the transaction would have taken place as follows: in 2018, PG bought Techem with two other private equity companies for 4.6 billion euros and then studied an IPO for a long time. Today, the company was sold for 6.7 billion to a consortium of investors made up of the American holding company TPG and the Singaporean sovereign wealth fund GIC.
An enigmatic deal
In real terms, Techem is a company of around 4,000 employees specializing in reading heating data and in the energy optimization of large residential buildings. Last year, it increased its turnover by 12.5% to 1.01 billion euros. Gross profit (Ebitda) is indicated at 552 million. But we still have to deduct, among other things, the interest on 2.8 billion in net debt. A possible net profit is not indicated, as one might suspect.
For PG, the sale is a good deal. But what pushes the TPG and the GIC to spend almost 7 billion for a heating reader that is barely profitable at the best of times? Why was Techem simply resold to international investors instead of being publicly offered for sale on the stock exchange, accompanied by a proper sales prospectus containing all relevant information?
First possibility: Finance Fiction?
There are two possible answers to this question. The first: the sale is part of a larger (secret) deal. Mega-funds buy each other’s stakes at exorbitant prices and thus increase their market value. This in turn affects managers’ bonuses. It would, so to speak, be financial fiction.
PG’s penultimate transaction also took place in complete secrecy. PG purchased a majority stake in biotechnology company FairJourney Biologics from GHO-Capital for an estimated 500 million euros, bringing the market value of the company to 41 million euros in annual revenue. dollars, to 900 million euros. It is not certain that this will ever become a profitable business. But in the meantime, it is the valuations that the “Global Investors” themselves have determined by their transactions which apply. GHO made an actual profit probably well over 100 million. Partners Group may recognize the participation in FairJourney on its balance sheet at the purchase price. Win-win – but ultimately only financial fiction.
Second possibility: prospect of market domination
The second possibility brings us back to the real economy: the activity of heating data collection services is already concentrated in a few hands, which has caused concern among the German Federal Cartel Office. In addition to the sector giants Techem and Ista, some 300 small services are still active on the European market, but they are hardly competitive. The takeover of Techem could be part of a plan to completely monopolize the market, significantly raise prices and increase profits so that Techem can be sold at an even higher price via the stock exchange. Millions of tenants would thus go to checkout. Lots of little beasts do a lot of harm in a few hands.
This is all speculation. We don’t know any more and we’re not supposed to know. The fact is that global financial markets have an unfortunate tendency to produce politically powerful multi-billionaires and leave us in the dark about who will ultimately foot the bill.
