Following the takeover of Mountain Technology AG, the Munich-based investment company Mountain Alliance AG is on its way to becoming a "leading investor for digital companies" in the DACH region. In an interview with Financial.de, CEO Daniel Wild sees the portfolio asset value, which has grown to over 40 million euros, only as a "successful intermediate step": "We want to keep pushing & grow even faster". If we find suitable acquisition targets, I could well imagine that in 12 to 18 months we will already be in the region of 80 to 100 million euros, i.e. doubling our current portfolio value." But Wild also has ambitious plans on the exit side: "Over the next few years, we are targeting larger exits that could be in the mid to higher seven-digit range. Financial.de also spoke to Mountain Alliance CEO Daniel Wild about the financial scope for acquisitions, the role model Draper Esprit and possible further insider purchases.
Financial.de: Mr. Wild, Mountain Alliance AG is listed in the m:access segment of the Munich Stock Exchange. How do you stand out from other listed investment companies?
Daniel Wild: As a lean, transparent and value-oriented investor, Mountain Alliance AG has many years of know-how and an excellent network. It invests with a clear focus in companies in four segments: Technology, Digital Retail, Digital Business Services and Meta-Platforms & Media, in which it currently holds 36 investments. Mountain Alliance AG has a symbiotic relationship with Mountain Partners AG, the majority shareholder, which creates great momentum in both organizations. The Mountain Alliance thus offers its shareholders easy access to a diversified portfolio of digital assets via the stock exchange.
Financial.de: In December, Mountain Alliance AG expanded its portfolio by six new investments with the acquisition of Mountain Technology AG. What did you specifically purchase?
Daniel Wild: The companies of Mountain Technology AG have not only ideally complemented our existing portfolio, but also raised it to a new level. Among the six new investments, I would like to highlight the specialists for in-memory databases: Exasol, movingimage with its leading enterprise video management solution, and mixxt, a provider of specialized intranet applications. Exasol, in which we have a stake of around 8%, operates as an infrastructure provider for Big Data in a highly interesting market and was recently voted into the "Tech Tour Growth 50" in 2019. Our 8% stake in movingimage, Europe's leading enterprise video content management systems company, is similarly promising, with large corporations such as Vodafone and Henkel among its customers.
Financial.de: What expectations do you have of your new investments?
Daniel Wild: We took over this portfolio because we see significant potential for value increase. I would like to take Exasol and movingimage as examples: With its leading database software, especially with regard to big data and data analysis, Exasol is not only developing very strongly operationally, but is also arousing desire among larger corporations, so that a lucrative exit could well be on the horizon here in the next one to two years. Due to the strong market position, an exciting exit is also likely in the medium term for movingimage. In the short term, we expect movingimage to continue its dynamic growth.
Financial.de: What effect do you expect on earnings from the acquisition of Mountain Technology?
Daniel Wild: This is an Accretive Acquisition for us, i.e. despite the increase in the number of shares due to the capital increase through contributions in kind, we expect a positive effect not only on net income but also on earnings per share for the current 2019 financial year. We will see a significant leverage effect if we are able to sell the first of these mature investments at an attractive price.
Financial.de: You mention potential sales: What does your further exit strategy look like?
Daniel Wild: Our objective has already been one to two exits per year and we have achieved this in recent years. We are targeting larger exits in the next few years, which could be in the mid to higher seven-digit range. This will also create additional scope for new investments. In principle, successful exits are an essential pillar of our business success and further expansion.
Financial.de: You see yourselves on their way to becoming a "leading investor for digital companies" in the DACH region. In addition to the acquisition of Mountain Technology AG mentioned above, what progress have you made recently?
Daniel Wild: Even before Mountain Technology, we took over another promising portfolio with Mountain Internet AG, in addition to participations such as promipool, which we ourselves launched and developed. Including Mountain Technology, our portfolio asset value has now grown to over EUR 40 million. However, this was only a successful intermediate step on the way to a portfolio size of at least EUR 100 million.
Financial.de: How do you intend to achieve the medium-term goal of a portfolio value of EUR 100 million? Are there any other investments in the portfolio of your major shareholder Mountain Partners AG that Mountain Alliance would like to acquire?
Daniel Wild: One pillar of our growth is the development of our existing portfolio. As already mentioned, we see significant value increase potential here. In addition to these expected enhancements in the value of existing investments, the increases in particularly promising portfolio companies will also further strengthen our portfolio value. The second pillar will be further acquisitions, also of entire portfolios, whereby in future we will focus on acquisitions outside the Mountain Partners Group. No further acquisitions of investments or entire portfolios of Mountain Partners AG are planned.
Financial.de: How fast do you want to grow in the future?
Daniel Wild: We want to keep pushing and even increase the pace of growth. If we find suitable acquisition targets, I could well imagine that in 12 to 18 months we will already be in the region of EUR 80 to 100 million, i.e. doubling our current portfolio value. Of course, this will require a major capital increase, which will expand our financial scope for acquisitions.
Financial.de: You are addressing the capital measure. What are your concrete plans?
Daniel Wild: As we announced on April 29, we will propose to the Annual General Meeting on June 27, 2019 a resolution on a capital increase with subscription rights. In MainFirst Bank AG, we have found the ideal partner to support us in the intended capital increase. The planned volume and the issue price of the new shares will be announced at a later date.
Financial.de: Let us come back to the current portfolio: In addition to the recent acquisitions, what are currently your most exciting and valuable investments?
Daniel Wild: promipool, our self-established, technology-driven celebrity platform, which is now also available in English and which we will continue to internationalize, is particularly close to my heart. With promipool we have been growing profitably for years. We are also confident that we will be able to extend our model, which works very well in German- and English-speaking countries, to other markets and thus increase promipool's market value enormously. Another exciting platform is Lingoda, a language learning platform that has grown by more than 100 percent over the past two years. Lingoda is the leading language teacher platform in Europe and a prime example of a highly scalable business model. As a third example, I would like to mention Volders, an Insurtech company with which we entered the high-growth online brokerage business with insurance contracts. In particular, the management of term contracts offered by Volders is attracting a great deal of interest from customers. Insurtech companies are currently showing dynamically rising valuations, as the large insurance groups do not want to repeat the mistakes of the banks and are investing in digital competitors at an early stage.
Financial.de: Let's talk about a negative point: The consolidated result for 2018 was adversely affected by the sharp decline in the share price of the listed investment The Native SA. Do you see this only as a snapshot or are you more concerned about the development of the Swiss investment?
Daniel Wild: We see the development at The Native as a negative exaggeration, which was also due to the difficult stock market environment in the fourth quarter of 2018. The Native is a major shareholder in German Asknet, which in turn has become a leading global provider of a commerce-as-a-service platform and merchant services through its merger with French Nexway. We see The Native's true value clearly above its current market capitalization. In the medium term, this position is an exit candidate too, but not at the current level.
Financial.de: Are there other “problem children” in the portfolio?
Daniel Wild: As already mentioned, we currently have 36 investments in our portfolio. Of these 36 investments, the largest 13 represent just under 90 percent of our portfolio value. Among the smallest investments, there are some "problem children" who cannot sustainably meet expectations. In total, however, these are of minor importance for the overall portfolio. It is important that these investments do not cause major costs and do not tie up management capacity unnecessarily.
Financial.de: How are things in the service business at the moment? After the decline in 2017, are there any positive impulses from this area again?
Daniel Wild: Yes, we are also seeing positive momentum again in the service business. In particular, the TV business, which declined significantly in 2017, performed well again in 2018. Basically, the service business is of importance to us not only because we are consolidating the companies. The know-how of the service companies also helps us to accelerate the growth of our technology investments.
Financial.de: There are many listed investment companies. Do you also have a role model that you emulate with Mountain Alliance AG?
Daniel Wild: That really does exist. Our role model is the English Draper Esprit, which is currently about eight times our size. Like us, Draper Esprit is a digital investment company, which as a rule is listed with a premium of 10 to 30 percent on the NAV. We want to become the German Draper Esprit!
Financial.de: After a long period of bottoming out, the Mountain Alliance share price jumped by around 20 percent in December. Is the capital market now beginning to recognize the potential of the "new" Mountain Alliance AG?
Daniel Wild: The takeover of Mountain Technology AG has certainly brought us additional attention on the capital market. This is another reason why we have begun to flank our growth strategy with a strengthening of our capital market activities. Feedback from recent investor meetings and roadshows has been very positive and encouraging. Nevertheless, Mountain Alliance AG is still under the radar of many institutional investors. This is another reason why it is very important for us to target the 100 million Euro mark.
Financial.de: You reported numerous insider purchases last year. Will there be any directors' dealings reports from you again this year?
Daniel Wild: I currently hold a share of around 6.5 % of the shares. I have bought Mountain Alliance shares regularly in the past and will continue to buy shares in the future as I am convinced of the company.
Financial.de: Mr. Wild, thank you very much for the interview.