"Our growth comes from three sources"
CEO, Mountain Alliance AG
Mr. Wild, Mountain Alliance AG has become pretty bold recently. Mountain Alliance is executing a cash capital increase of 2:1 in order to raise 18.9 million euros. Why have you decided for such a sizeable capital increase?
Wild: It’s a further step on the way to achieving our goal of a portfolio value of at least 100 million euros. In the 2018 financial year, our portfolio already rose from 31 million to 44.3 million euros. To realise our goal more quickly, we need more fresh capital, which we would like to use to further invest in our current portfolio, buy additional stakes in promising companies, and partly reduce borrowed resources.
Regarding new investments, you are also considering acquisitions. Do you already have any concrete targets?
Wild: We are screening the market very closely and we have access to interesting portfolios through our network. It’s an opportune moment to make further acquisitions. We are looking at several significant portfolios in the German-speaking world that match our growth strategy.
Does that also mean additional stakes in companies from the portfolio of your main shareholder, Mountain Partners?
Wild: No, currently we are not planning to invest in, or buy, any portfolios from Mountain Partners. The two transactions that took place in the last 24 months, the acquisitions of Mountain Internet AG and Mountain Technology AG, have contributed significantly to the growth and momentum at Mountain Alliance. However, other transactions between Mountain Partners and ourselves are not envisaged at the present time.
The subscription period for the current capital increase ends on July 24. How likely do you think it is that your majority shareholder, Mountain Partners, will participate? What effects do you expect?
Wild: We and Mountain Partners have a common goal: to increase the free float of the Mountain Alliance share. This goal will influence Mountain Partners’ attitude in exercising its options and make it even possible to attract a large number of new investors through this capital increase and diversify our shareholder base. We believe a broader investor base will also increase the liquidity of our share. Non-cash contributions and financial support from Mountain Partners in the past have contributed significantly to the growth and prevailing momentum at Mountain Alliance, for which we are very grateful. Mountain Alliance and Mountain Partners have a symbiotic relationship, and we will continue to support each other’s development in the future.
All new shares that are not taken up by Mountain Partners and the other original shareholders will subsequently be offered to new investors in the course of private placements. How are the conversations with new investors going so far?
Wild: We have held numerous investor meetings across Europe in the last couple of months. Mountain Alliance and its business model encounter positive feedback and vivid interest among strategic investors. As part of this capital increase, we can, for the first time, offer larger investors the opportunity to take a stake.
Two years ago, you announced that Mountain Alliance would become a “leading investor for digital companies” and you set a target portfolio value of 100 million euros. At that time, the company’s market cap was still under 20 million euros. What progress have you made in the meantime?
Wild: We have made significant headway with Mountain Alliance in the past 24 months. The portfolio value has meanwhile doubled to over 40 million euros. Our portfolio has reached a new level, not only from a quantitative standpoint but also a qualitative. We currently hold shares in 36 exciting companies with a focus on technology investments. Additional capital should enable us to take the next step in our growth through a combination of financing existing investments and through acquisitions.
Can you give two examples from your portfolio where you could imagine a strong, dynamic development?
Wild: The first example would be Lingoda, an online language school based in Berlin. Its operating business has developed splendidly. Its revenues have risen by more than 90% since it was founded. Lingoda has made a name for itself in the exciting market of online training and online language learning. It also has a fantastic team that understands what people want from language learning today and can help drive the further development of this dynamic market. This has attracted the interest of investors outside the existing group of investors, and we expect that this will benefit Mountain Alliance very soon.
The second example is Promipool from Munich. It’s one of the most successful online people portals in Germany. Promipool has a highly compelling business model in the market for private media consumption. Promipool is exploiting the global trend towards video on demand and the serialisation of media formats. It generates stories about the celebrities in these series on an international scale. Promipool offers high-quality content, independent of device, medium, platform and ultimately independent of language. As a result, it has created a system that can be rolled out quickly and efficiently to very different markets. Promipool is very well positioned, and we think that will spark the interest of investors and have a positive influence on the value of Mountain Alliance’s portfolio.
Investment companies' stocks are not really en vogue with investors at the moment. Why should an investor care about Mountain Alliance AG?
Wild: Because Mountain Alliance is active in venture capital, an asset class in which only a handful of stock-listed investment companies are active today. But this asset class is highly attractive because the financing cycles of technology companies differ from the funding cycles of traditional VC funds. That means there’s a financing gap between the time when the fund ends and the liquidity event, for example an IPO by the company. We close that gap by purchasing such stakes. In doing so, we give stock investors access to digital value creation that they would normally be locked out of without Mountain Alliance. This lock-out can be seen with the current IPO valuations — they’re much higher than they were a few years ago. Only few investors outside the stock market have been able to participate in the value creation up to the point of an IPO. With our system, we’re breaking open that barrier.
So now is the ideal moment to invest in Mountain Alliance?
Wild: In terms of the market’s development, it couldn’t be a better time because we’re taking advantage of the momentum from the consolidation in the digital industry. As a result, we’ve reached a relevant size and have sufficient further acquisition targets to support our future growth. We plan to achieve a sustainable increase in the value of our portfolio in three ways: by increasing the value of our existing stakes, by increasing our share in particularly promising companies within our portfolio, and by acquiring other portfolios outside the Mountain Partners Group.
Mr. Wild, thank you very much for the interview.
This interview was recorded for wallstreet-online.de in German.