Investor Presentation • Aug 14, 2020
Investor Presentation
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Delivering on "Aareal Next Level": Accelerate Aareon's growth and value creation by partnership with Advent
August 14, 2020 Hermann J. Merkens, CEO
The transaction takes advantage of the very favourable market environment for resilient software-centric businesses
| Unlock potential |
▪ Create a platform for Aareon to achieve its full potential ▪ Become Europe's undisputed software leader facilitating the digitalisation of the real estate industry ▪ Leverage the strategic advantages offered by digitalisation to contribute to a more sustainable economic growth |
Ambition level: Become a "Rule | ||
|---|---|---|---|---|
| Value creation |
▪ Cornerstones of a value creation plan have been agreed upon; updated business plan to be defined and presented over the coming months ▪ Core elements: Boost organic growth, drive operational excellence and execute M&A |
Annual revenue growth + EBITDA margin |
of 40" software company today 30% |
by 2025 >40% |
| Roll-up M&A strategy |
▪ Support and enhance existing M&A roadmap and significantly step up M&A activity ▪ Drive consolidation in a fragmented ecosystem ▪ Benefit from Advent's extensive network, transaction execution and sector expertise |
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| Strategic support |
▪ Advent to be represented in Aareon's Supervisory Board ▪ Advisory Board to support Aareon Management with industry and functional expertise with a view to achieve mutually agreed visions |
"Rule of 40": Sum of Aareon's annual revenue growth and EBITDA margin will at least reach 40 per cent |
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| Financial support |
▪ Utilise Aareon's significant debt capacity for M&A ▪ Further equity contribution from Aareal Bank and Advent on a pro rata basis as required ▪ Support by Advent with debt, equity and capital markets expertise |
| Value crystallisation today | ▪ Crystallise Aareon's current value in a very favourable market environment for resilient software-centric businesses for Aareal Bank ▪ Realise an attractive capital gain as of closing, hence… ▪ …significant increase of our regulatory capital |
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|---|---|---|---|
| Upsides for the future | ▪ Achieve higher value contribution to our shareholders in a partnership by… ▪ further accelerating Aareon's EBITDA and revenue growth beyond promised 2025 levels ▪ multiple re-rating of Aareon as a "Rule of 40" company ▪ Minor EPS effect on Aareal Bank Group level to be compensated over time by significantly raised Aareon ambition level |
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| Use of proceeds | ▪ Unlock additional growth potential as promised in "Aareal Next Level": ▪ Pursue value-enhancing sustainable opportunities in both segments See of the Bank's business next page ▪ Further support Aareon's M&A roadmap with strong new partner ▪ Enhance flexibility regarding capital management actions |
…leading to
Increased optionality regarding value-enhancing opportunities, if and when they arise
Advanced flexibility regarding potential capital management actions
By doing so create sustainable value for Aareal Bank and hence our shareholders…
solutions across 3 continents: Europe, North American and Asia/Pacific
Integrated payment transaction system for the housing industry (market-leading) and the utility sector
Mission-critical ERP and broad set of modular Digital Solutions built on a cloud-enabled PaaS platform
Sustainable and resilient business model with strong downside protection delivers decades of consistent profitable growth
Experienced leadership team combining deep software expertise and longstanding real estate experience with a strong M&A roll-up track-record
Managing Director Investor Relations Phone: +49 611 348 2636 [email protected]
Director Investor Relations Phone: +49 611 348 3337 [email protected]
Director Investor Relations Phone: +49 611 348 3616 [email protected]
Manager Investor Relations Phone: +49 611 348 3009 [email protected]
Group Sustainability Officer Director Investor Relations Phone: +49 611 348 3424 [email protected]
Manager Sustainability Management Phone: +49 611 348 3554 [email protected]
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