Hans Georg Näder, the extroverted CEO and owner of the German global market leader in prosthetics, has already had to cancel the IPO twice. The third attempt must succeed, or trouble looms. Ottobock’s engagement in Russia also raises questions.
The three electrically powered semi-trucks embarked on their journey to Paris several weeks ago. They were loaded with large machines and more than 20,000 spare parts. With these, the German company Ottobock will equip 15 workshops where athletes can repair their gear during the Paralympic Games, which begin at the end of August.
The manufacturer of products such as prosthetics, wheelchairs, and leg and arm braces has been supporting the sporting event since 1988. In doing so, they promote products specially manufactured for athletes, with the company logo prominently displayed on the equipment of many German participants.
In Paris, the company will once again present itself as a prime example of a global market leader from the German provinces. The headquarters in Duderstadt, a town of about 20,000 people east of Göttingen, manages a corporate network with nearly 9,000 employees in 60 countries and revenues of almost 1.5 billion euros. Since the beginning of the year, the company has once again become fully family-owned.
This is not intended to remain the case: After buying back the shares from a financial investor, Ottobock aims to make the leap to the stock market as soon as possible, following two unsuccessful attempts. However, recently published figures show that this could be a challenging path. Ottobock’s continued engagement in Russia also raises questions.
Without Hans Georg Näder, the company in its current form would be inconceivable. The descendant of his namesake has been steering Ottobock’s fortunes for almost 35 years, and little has changed with his move to head the supervisory board. The 62-year-old is undoubtedly one of the most colorful figures in the German corporate world, and not just because of his pronounced love for vibrant silk scarves and luxury yachts.
On one hand, he is considered the prototype of the tireless entrepreneur, constantly excited about new ideas and promoting charitable projects through a foundation. On the other hand, former employees describe him as erratic, with some top managers not even lasting a year in office.
A True Miscalculation?
The partnership with private equity investor EQT, initiated in 2017, also had its ups and downs. EQT acquired a 20% stake in Ottobock, with the partnership aimed at facilitating an initial public offering (IPO). When the second attempt at an IPO was called off in 2022, and efforts to sell EQT’s shares also failed, the financial industry snidely remarked that the investor had made a true miscalculation.
However, a buyer emerged early this year. Through the holding company that consolidates his entrepreneurial activities, Näder regained complete ownership of the company. He financed the buyback of shares by securing €1.1 billion from credit funds. These loans are due at the end of their term, and given the high interest rates and the holding company’s already slim equity ratio of 14% before the transaction, repayment seems feasible only through an IPO. Näder continues to pursue this goal, stating that they are ready, but the environment wasn’t right in 2022.
Ottobock’s previously undisclosed results might cast doubt on this assessment. Ottobock SE’s 2022 financial statement lists 154 subsidiaries under its umbrella. However, its business situation appears far less impressive. Revenue increased from €476 million to €508 million within a year – “thus falling short of the 13 to 16 percent growth target,” the report states.
The report primarily attributes this to the lingering effects of the COVID-19 pandemic. Debt grew significantly more than revenue, with liabilities to banks rising from €762 million to €963 million in 2022.
While the annual result climbed from zero to €51 million, without income from currency transactions and the reversal of provisions from an executive incentive system, a loss would have been incurred. Expenses of €12.4 million for the cancelled IPO also had a negative impact.
Ottobock explains that this financial statement represents only part of the group’s business development. The group reportedly increased its revenue by more than 12% to €1.3 billion in 2022. Acquisitions contributed to this growth and were the main reason for the higher debt. The parent company, Näder Holding, also operated at a loss, posting a €14 million deficit after taxes.
In contrast, activities in Russia, including a manufacturing site in the industrial city of Tolyatti, contributed a positive result of €12 million. Ottobock justifies maintaining its operations after the onset of the war in Ukraine partly on humanitarian grounds. In response to inquiries, Ottobock states that business is declining, with the number of entities reduced from seven to four. They emphasize a focus on civilian care. “Ottobock does not collaborate with the Russian military and does not participate in any Russian military tenders,” the company asserts.
Insiders report that these operations were not without issues even earlier. Years ago, there were allegedly criminal proceedings against Otto Bock employees, reportedly stemming from inflated transfer prices in Russian transactions. The public prosecutor’s office in Braunschweig, specializing in economic crime, confirms that these proceedings took place but are now concluded. Ottobock states that there were no “legal disputes or court convictions of employees.” They claim the investigations did not pertain to transfer prices in Russia and were discontinued.
One man in the company is particularly familiar with the Russian market. Oliver Jakobi, CEO since late 2022, moved to Moscow in 1998 according to his LinkedIn profile. Even after his promotion to head of the Europe and Middle East region, he maintained Moscow as a second base alongside Duderstadt. The company reports that Jakobi’s last visit to Moscow was in February 2022. “Since 2020 – with the onset of the COVID-19 crisis – he has been performing his duties predominantly in Germany,” they state. There’s certainly plenty to do there as well.