AURELIUS - 2023 in Review

Dear everyone,

As 2023 comes to an end, we are delighted to share our highlights with you. Despite presenting its fair share of challenges, this has been a successful year for us here at AURELIUS.

Even against a difficult economic backdrop, AURELIUS’ expertise in complex corporate carve-outs and for the transformation of businesses with operational improvement potential meant that we have been able to seize a range of opportunities across all our investment segments.

But before we go into more detail, let´s first take a look at some of the big themes which have shaped our year: AURELIUS has carried out several new landmark transactions, generated super returns with successful exits and strengthened the team with new hires across all functions and office locations.

The backbone of our business, our operational expertise, has been expanding, and we standardised our AURELIUS Operating Model further and will continue to build it out in the years to come. Geographically, AURELIUS is expanding further: we now have a presence in New York, our first office in North America.

All of this was only possible because AURELIUS´ people have a passion for creating impact and are driven by a bold, entrepreneurial mindset, ready to take contrarian views when required.

All of us at AURELIUS Group, would like to thank you for your support in 2023. We will strive to maintain our momentum into 2024 but, until then, we wish you Happy Holidays and a successful, healthy, and happy New Year!

By the way: if you would like to know more about AURELIUS’ expectations for 2024, check out a recent series of LinkedIn posts by our founder Dirk Markus.

Exciting deals and exits

Despite the challenges the Private Equity industry faced in 2023, AURELIUS has been very active. For our mid-market investment strategy, we acquired five platforms, including LSG Sky Chefs from Deutsche Lufthansa, ECO3 from Agfa and TM Group from Dye & Durham. For our growth investment strategy, we acquired five new platforms. Across AURELIUS, 14 add-on acquisitions strengthened the existing portfolio. Furthermore, the Private Debt team completed five deals.

In addition to this consistent new investment activity, AURELIUS successfully sold Distrelec to RS Group and connexta to Fremman Capital, generating exceptional returns for our investors in the process.

While we expect investment activity across the market to remain subdued in 2024, we will continue to be proactive in seeking out complex carve-outs with high potential for operational improvement.

Expanding our footprint into North America

AURELIUS has become steadily more international in recent years, both in terms of the transactions executed as well as in its own workforce. Our strategic expansion into New York City marks a significant next step and highlights the growing focus on investments in companies that are active in North America, such as LSG Sky Chefs.

Spotlight on: Managing complexity with the LSG Group’s carve-out from Lufthansa

In April 2023, AURELIUS acquired global airline catering specialist LSG Sky Chefs from Deutsche Lufthansa. This spin-off was extremely complex from day one, and therefore perfect for AURELIUS. LSG’s international reach meant, the team had to carve out 161 legal entities in 49 countries. AURELIUS deployed significant operational, legal and financial know-how and resources to work through the enormous challenges of this transaction. In the end, success was based on our ability to manage these complexities, but also on trust and good faith in AURELIUS as an investor and true partner to Lufthansa and LSG.

 >> Read more in our AURELIUS Insights: LSG Group here

Generating superior returns for investors

The exit of Distrelec, a European B2B distributor of electronic and technical components, was a great success. The platform was acquired in a corporate carve-out transacti0n and this was followed by a holistic operational transformation involving end-to-end digitalisation during three years of AURELIUS´ ownership which saw profits grow ten-fold. AURELIUS used the time as an owner to build a standalone, scalable and customer-centric omni-channel platform for the business – a goal achieved in July 2023, when Distrelec was sold to RS Group.

>> Read more here

After forming an integrated IT-Services Group, AURELIUS sold connexta to financial sponsor Fremman Capital in November 2023. The story of connexta is one of many smaller independent businesses merged into an integrated group operating throughout Germany. The enlarged entity can now generate cost and growth synergies as well as innovation potential. In just four years, AURELIUS supported connexta on complex issues such as succession planning and in acquiring nine add-ons, steering the business to become a leading fully integrated IT provider.

 >> Read more here

Continuous growth at AURELIUS

The AURELIUS team grew strongly back in 2022, and we are proud that the growth continued this year. Today, almost 340 professionals – including 180 operational specialists – work out of 10 offices spanning Europe and soon North America.

ESG within the portfolio: Playbooks to support

Private Equity is increasingly focused on ESG. AURELIUS developed a standardised ESG playbook to support the portfolio companies along their journeys, in particular in the areas of sustainable supply chains and ESG reporting. Growing demands from stakeholders for ESG data and upcoming regulatory requirements played a key part in informing the decision for creating these playbooks.

Outlook

Looking ahead to 2024, we are confident that the new year will favour Private Equity firms with strategies like AURELIUS, given our long-standing expertise in operational excellence. We expect a bifurcation of our industry, as those who have proven experience here are able to apply it successfully to opportunities while others who have been relying on multiple expansion and financial leverage may find they cannot repeat this in the current economic backdrop.