*Data based on year to date BDSwiss Group activity (last update end of Q2)
BDSwiss offers its clients a new investment product, Digital Fund Management, whereby investors will acquire a financial subunit from BDSwiss that matches the performance of GermanBlueChip Pool (GBC). GBC is an alternative investment fund that provides leveraged exposure to leading German companies with an active investment approach that applies private equity strategies to public companies.
Starting from 100,000 EUR, BDSwiss offers indirect access to this alternative investment opportunity enabling qualified, well-informed and institutional investors to diversify their portfolio. BDSwiss can offer its clients this indirect access by acquiring units of the funds itself and structuring these into subunits as part of its own BDSwiss - Digital Fund Management product.
GBC plans to pay its direct investors (such as BDSwiss) a quarterly dividend of 1% (or 4% p.a.*) and aims to generate an annualized target return (IRR) of over 20%**. BDSwiss passes those planned target returns directly to its own investors of the Digital Fund Management product.
In order to best benefit from GBC’s investment approach, investors should consider this a long-term investment.
Starting from 100,000 EUR, BDSwiss offers indirect access to this alternative investment opportunity enabling qualified, well-informed and institutional investors to diversify their portfolio. BDSwiss can offer its clients this indirect access by acquiring units of the funds itself and structuring these into subunits as part of its own BDSwiss - Digital Fund Management product.
GBC plans to pay its direct investors (such as BDSwiss) a quarterly dividend of 1% (or 4% p.a.*) and aims to generate an annualized target return (IRR) of over 20%**. BDSwiss passes those planned target returns directly to its own investors of the Digital Fund Management product.
*View Notes
*=typical dividend yield of a target company
**=Target Return (IRR) equals net fees including distributions. Please note that all target returns represent internal
performance goals based on currently available
information and own calculations; IRRs are subject to change and can vary significantly over time.
In order to best benefit from GBC’s investment approach, investors should consider this a long-term investment.
*=typical dividend yield of a target company
**=Target Return (IRR) equals net fees including distributions. Please note that all target returns represent internal
performance goals based on currently available
information and own calculations; IRRs are subject to change and can vary significantly over time.
German listed companies with strong anchor investors substantially outperform those with a fragmented shareholder structure.
Companies with actively involved, very strong founding families or large shareholders are, on average, significantly more successful than other DAX companies.
A suitable anchor shareholder creates stability similar to that of a family-owned business since the management in both cases has a clear mandate and a backing of the company‘s owners.
Public German companies tend to have larger hidden reserves and restructuring potential, but union rights and a consensus-driven corporate culture set hurdles for international investors. Successful restructuring requires in-depth knowledge of the local mentality and legal framework which is exactly what GermanBlueChip provides.
After having secured sufficient market influence (“all three green lights”) GermanBlueChip builds a value creation ecosphere to actively generate attractive alpha returns and strategic benefits for its investors!
The German economy is the 3rd largest exporter globally, powerhouse of the EU and a center for innovation and competitiveness. Nevertheless, the leading stock market index DAX lags significantly behind its international peers in terms of earnings multiples.
The main reason is the combination of a fragmented shareholder structure and the corporate governance regime in German large caps restricting the power of shareholders. The GermanBlueChip team has developed and applied a strategy to overcome these restrictions and to make the intrinsic value of companies visible.
Many German large caps have a fragmented shareholder structure and lack an anchor investor so that the influence of the capital side on the supervisory board often is weak.
Disconnected shareholder representatives encounter a well-organized group of employee representatives – pursuant to the German co-determination law.
Under these circumstances the decision making of the board is typically consensus driven and less focused on shareholder value. In some cases, the employment of capital is less efficient, and the company’s growth lags behind its international peers.
GBC selects excellent undervalued German blue-chip companies (leading in terms of technology, market position, balance sheet, dividend yield), builds a strong minority position, gains influence on the supervisory board and cooperates with the employees.
The team of GBC strives to implement new incentive schemes for the management to ensure complete alignment of interests. All stakeholders are thus motivated to work in the best interest of the shareholders and to remove inefficiencies.
Public German companies tend to have large hidden reserves and restructuring potential. The sum of the parts (SOP) often exceeds the market cap to a large extent. Example case:
The first step is the focus on the core business combined with share buybacks.
Topics such as restructuring, product portfolio, efficiency, cost reduction, marketing and potential M&A activities play a vital role for the strategy. The GBC team aims to build or strengthen the portfolio companies’ position as global market leaders.
Within a time frame of 4-6 years this should generate attractive returns – as the team has already proven in the past.
Over the past 15 years, members of the team have built an impressive track record and can rely on a unique network of industry experts in Germany as well as profound expertise in active value creation.
The team of GBC increases the invested amount via debt financing. The leveraged part of the investment is typically protected by a sophisticated hedging strategy.
The investor receives 100% of the unleveraged portion of the dividend as direct pay-out throughout the whole investment period. The surplus - derived from the leverage - is used mainly for capital accumulation in the fund and for covering financing and hedging costs.
GBC's base case scenario for a 5-year investment is a share price doubling within five years – translating into an annual return of 16%, excluding dividends.
In other words: GermanBlueChip provides leveraged exposure to leading German companies combined with an active investment approach that applies private equity strategies to public companies.
GBC has a transparent and simple fee structure that only consists of an upfront subscription fee of 5.75% and a performance fee of 33.33% on all payouts.
BDSwiss adopts this fee structure for its own Digital Fund Management product and charges an extra 1% annual management fee, for enabling its investors exposure to GBC’s unique alternative investment opportunity, starting already from 100,000 euro.
Given the investment’s return potential, BDSwiss’ fees only represent a small amount in comparison as represented in the chart.
The service providers of the fund are leading global players in their respective fields (e.g. custodian bank, auditor, fund administrator, AIFM). Together they build a system of checks and balances safeguarding investors’ capital in the best possible way.
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