Information on the Target

In-tech, headquartered in Garching near Munich, is a leading service provider specializing in software development, testing, and validation, primarily within the automotive, rail transport, and smart industry sectors. The company focuses on cutting-edge solutions in e-mobility, connected and autonomous driving, electric vehicles (EVs), and railroad technology. Its offerings encompass system design, methodical consulting, advanced electronics platform development, and validation of automotive-specific software and hardware systems, including infotainment and experience validation.

Over the past five years, in-tech has demonstrated robust performance, recording double-digit average annual sales growth, which reflects its strong market position and the favorable macro trends influencing its target industries. This growth trajectory has positioned in-tech as a significant player in driving digitization across various sectors.

Industry Overview in Germany

The technology sector in Germany, particularly in IT services and software development, has experienced significant growth, fueled by increasing demand for digital transformation across industries. As businesses strive to enhance operational efficiencies and customer experiences, the need for innovative solutions has driven investments in software development and related services. This trend is supported by Germany's strong engineering foundation and a robust talent pool in technology.

Moreover, trends such as the rise in e-mobility, automation, and connected devices are reshaping the automotive and transport sectors. Companies are increasingly adopting digital solutions to remain competitive, which further propels the demand for specialized services like those offered by in-tech. The intersection of software development and traditional industries creates a wealth of opportunities for businesses adept at navigating technological advancements.

The macroeconomic environment in Germany remains conducive to growth, with government initiatives promoting digitalization and infrastructural investments aimed at supporting the tech ecosystem. This favorable landscape positions companies within the IT services segment to capitalize on emerging trends and expand their market share.

In the context of Germany's overall economic stability, the IT services sector is expected to continue flourishing, driven by innovation and the pivot towards sustainable solutions. Thus, the outlook for software developers and service providers is optimistic, paving the way for significant opportunities and value creation.

The Rationale Behind the Deal

Deutsche Beteiligungs AG (DBAG) has successfully concluded its investment in in-tech through its sale to Infosys, marking a significant milestone within its investment strategy. The rationale behind the sale stems from the substantial value created during the two-year holding period, which has seen an impressive return of over three times the original investment. This outcome is a reflection of strategic initiatives implemented during the investment that effectively enhanced in-tech's market position and operational efficiencies.

The completion of this transaction signifies not only a successful exit for DBAG but also underscores the efficacy of its buy-and-build strategy. By leveraging its M&A expertise, DBAG was able to facilitate in-tech's growth through targeted acquisitions, thereby broadening its capabilities and expertise in the digital solutions space.

Information About the Investor

Deutsche Beteiligungs AG (DBAG), based in Frankfurt/Main, is a prominent private equity company specializing in investments within medium-sized businesses in German-speaking countries. With a portfolio that includes several successful technology enterprises, DBAG has built a reputation for supporting growth through strategic investments and operational enhancements.

DBAG Fund VIII, under which in-tech was acquired, is one of the largest private equity funds in the region, boasting a total volume of 1.1 billion euros. The fund focuses on a buy-and-build strategy, which has enabled it to navigate the competitive landscape of technology investments effectively. DBAG's extensive experience in the IT services sector has contributed to its ability to drive growth and create significant shareholder value.

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Evaluating this transaction, it is evident that DBAG's exit from its investment in in-tech reflects a successful application of their investment strategy and showcases the strength of the IT services sector in Germany. The remarkable return achieved from this investment demonstrates proficient management and a keen understanding of market dynamics, suggesting that this was indeed a worthwhile investment.

Furthermore, the growth of in-tech, supported by strategic acquisitions during DBAG's investment period, indicates a well-executed value creation process. The focus on digital solutions positions in-tech favorably in an evolving market landscape, suggesting that the investor's decision to leverage acquisitions for expanding capabilities was sound.

Nonetheless, the ongoing challenges in the tech sector, such as talent shortages and rapid technological advancement, necessitate continuous adaptation and investment in skills and technology. However, DBAG's partnership with in-tech, characterized by a collaborative approach and commitment to excellence, bodes well for future performance, making this a potentially resilient investment opportunity.

In conclusion, the sale of in-tech to Infosys not only highlights DBAG's investment acumen but also indicates a robust market for IT services, presenting further opportunities for value creation within the sector.

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