Dietmar Palan, 1 October 2024 Manager Magazin
Ottobock: The Full Extent of EQT’s Investment Disappointment
Private equity firm EQT’s investment in prosthetics manufacturer Ottobock, led by volatile majority shareholder Hans Georg Näder, has ended in what can only be described as a debacle. Internal documents reveal a significant disconnect between expectations and reality.
While examining regulatory filings typically proves as engaging as reading a phone directory, Hans Georg Näder’s (63) corporate endeavors consistently prove an exception. Few instances in German business demonstrate such a stark contrast between promised excellence and documented reality as seen with the majority owner of Duderstadt-based prosthetics manufacturer Ottobock.
In 2022, Näder initially boasted of €238m in profits - a figure arrived at after certain adjustments and the exclusion of interest, taxes, and depreciation to reach an adjusted EBITDA. This was the same year he initially pushed for an IPO before subsequently withdrawing.
Several weeks ago, however, regulatory filings revealed the stark reality: a net loss of €18.7m for the period when accounting for all positions. This information emerged in the Näder Holding GmbH & Co. KG’s balance sheet published in the Federal Gazette, which primarily reflects the global operations of Ottobock SE & Co. KGaA.
The figures suggest that Näder’s IPO withdrawal wasn’t primarily driven by Ukraine-related market anxiety, but rather by the company’s condition, which appeared ill-suited for public market scrutiny.
Documents from private equity giant EQT illuminate what potential investors were spared. The Swedish firm acquired a 20% stake in the operative Ottobock SE & Co. KGaA in 2017, only to sell it back to Näder in March 2024. During this period, the investment proved particularly challenging for the capital market professionals. According to documents obtained by Manager Magazin, EQT paid €415m for the stake and received €579m upon exit, resulting in a €164m increase. While this might appear favorable at first glance, the fund-cost-adjusted internal rate of return for EQT’s investors amounts to a mere 4% annually - comparable to current sovereign bond yields.
Another crucial performance metric further underscores the disappointing outcome: the Multiple on Invested Capital (MOIC). While a cost-adjusted multiplier of 2 is considered successful (€100 invested yielding €200, or 100% growth over the investment period) - a benchmark that the Swedes typically achieve with their EQT VII fund - Ottobock delivered a multiplier of just 1.1, representing a mere 10% return over 6.6 years. “For a risk investment,” according to one fund investor, “this is simply unacceptable.”
Sven Krüger, Näder’s longtime media counsel, displayed a peculiar response to these findings: while declining to answer questions, he meticulously pointed out an incorrect company address in the email inquiry. Simultaneously, he claimed to identify “largely grossly incorrect and misleading figures and speculation” in the questions posed.