by Henning Hinze
Please Note: The original text was published in German. The following translation was undertaken by Thoma Bravo.
Billionaire Orlando Bravo, head of one of the world's leading tech investment funds, expects a flood of money for the German digital economy in the Trump years.
Among tech investors, Thoma Bravo is one of the addresses for the really big deals. A few weeks ago, the company announced that it was buying Boeing's digital subsidiary Jeppesen, among other things, and paying the aircraft manufacturer in need of restructuring almost 11 billion dollars. It was one of the few major private equity takeovers in recent months - and a foretaste of a similarly large takeover in Europe, claims the founder Orlando Bravo (54), who is probably worth 10 billion dollars himself.
manager magazin: The private equity sector has had little reason to celebrate recently. There have been hardly any sales of investments and investors are holding back. Now Trump's trade policy is unsettling the economy. What is the mood of the industry at its summit meeting, the Superreturn in Berlin?
Orlando Bravo: We are incredibly positive, always. We get paid a lot of money as an industry, so our business is never easy. And buying companies in uncertain times offers phenomenal opportunities: Some sellers exit at the wrong time because they don't recognize the true value of the people, products, technology and customers in their companies.
However, the industry's problem at the moment is that it can sell off its investments because prices are too low. Do you see any signs of a market recovery?
No, the situation is rather intensifying here. After the private equity boom in 2021, there was a slump and higher interest rates. Many people therefore held on to their investments a little longer. But now geopolitical uncertainty and volatility have increased significantly. In terms of liquidity, things continue to deteriorate.
Many people complain that pricing is almost impossible and that the environment is too uncertain. This affects everyone, including you.
The truth is: you always sell in the current environment and must never regret it. Over the past year, we have paid back over 20 billion dollars to our investors. In a few cases, our deal teams hesitated, but now we are happy to have sold. The whole point of private equity funds is not to keep adding value forever. We buy something, improve it, sell it at a profit - and start all over again.
Sorry, but we still see no reason for optimism.
During the dotcom crisis, software companies crashed on the stock market from 100 dollars to 1 to 2 dollars. During the financial crisis, it was unclear whether you should keep your money in banks at all. That was also really difficult. But both phases proved to be the best times to buy companies from a private equity perspective.
Do you think we are at the beginning of a new wave of investment?
Yes, now really is a phenomenal time to invest. There are good buying opportunities right now. Even if the companies are not that cheap.
There is a conspicuous hustle and bustle in the German tech sector of all places: CVC has bought Compugroup, KKR Datagroup. Your company Thoma Bravo has taken over the two software companies EQS and USU. Where is the new interest coming from?
There are great software assets here, many of which were created in the SAP environment. The venture community has also invested very successfully in the founding of European software companies. They are now in a phase that is ideal for private equity to enter. They want to expand into the USA and compete globally. We believe that, as the largest software private equity firm, we can help them do this. And we see something else: The software market in the US and Europe consists of many high-quality companies that are not making a profit. We are in a position to give them the growth they want and make them very profitable at the same time.
Aren't you actually fleeing the USA with your capital out of fear of Donald Trump's chaotic policies?
Our global investors deliberately want to invest more money in Europe.
What is the motivation?
The decline of the dollar. Investors outside the USA have invested heavily in dollar securities. They are now saying: The US used to be an almost risk-free place to invest, but that has changed. They are now adjusting their capital allocation in real time. Naturally, this raises the question: where should the money be invested? China has its own ecosystem. So, it's a good time for Europe to prepare for this influx of capital.
Is it primarily European and Asian money that comes here, or does capital also flow from the USA?
It is coming from everywhere. Even in the USA, investors are trying to invest less in the USA and more in Europe due to the weak dollar and geopolitical developments. As recently as January, there was incredible optimism in the USA because a major boom was expected due to deregulation and lower taxes. Now the economy has shrunk by 0.3 percent in the first quarter, which is worrying. And nobody knows what the situation will look like in six months' time.
What does Europe need to do to "prepare for the influx of capital", as you say? The European economy and the tech industry in particular are considered to be overregulated and left behind in fields such as AI.
I don't think that's a foregone conclusion. Okay, Europe has no Google, no Meta, no Microsoft.
And no ChatGPT and no DeepSeek.
I wouldn't be too worried about that. These language models become a kind of raw material that is further developed for different regions and problems. This is actually a great opportunity for European companies.
The European Commission is much more concerned than you are. In its so-called Draghi report, it states that Europe would have to invest 750 to 800 billion euros every year in the technology sector in order to catch up. Otherwise there is a risk of permanent agony.
I don't think the AI race is lost for Europe. The question is: what is Europe looking for? Probably not necessarily a company that was created here by chance but creates jobs elsewhere. But good, high-paying jobs in Europe. Instead of chasing after Open AI, Europe should use its groundwork wisely for its own business models. Germany still has phenomenal engineering expertise.
What are you thinking of?
Some time ago, we delisted a cyber security company called Sophos from the London Stock Exchange. Our portfolio company Darktrace, on the other hand, uses AI to create complex analytical diagnoses. And Google's AI originated from the company DeepMind. It was once bought for a ridiculous price in the UK.
These are just a few lighthouses. In your opinion, what regulations are hindering the development of real technology clusters in Europe?
The USA is now also heavily regulated, almost along European lines. I think some rules, for example for social networks, are necessary - there are considerable problems there. What Europe could make more flexible is the creation and reduction of jobs, especially high-paid jobs. These skilled workers can quickly find a new position. But overall, I don't currently see European regulation as a major obstacle to investment.
Larry Fink has just described the weakness of the European capital market as a major problem. There are few IPOs and company valuations are lower than in the USA, especially for tech companies. Do you share this criticism?
Look at how much money private equity firms are still raising with new funds, it's crazy. There are all these geopolitical problems, the world is reorganizing, there could be a major recession. And yet private capital is still looking for good companies. Companies don't necessarily have to go public. And if they do, they can do so on the New York Stock Exchange or the Nasdaq.
You yourself closed a 1.8 billion fund for Europe at the beginning of the year. Compared to their 24 billion flagship fund in the USA and 180 billion in assets under management, this is not yet a flood of capital.
That's a good start - from zero to 1.8 billion. We'll walk before we run. If all these deals end up being as good as we think they will be, then we'll keep going. We have already invested in Europe with our flagship fund and that is going extremely well.
Are you warming up here for major takeovers such as the Boeing technology business, in which you have just invested 11 billion dollars in the USA?
I think something like this will happen in Europe within the next five years. I can't tell you what deal we'll do then, and none is imminent. That will also come out of our global flagship fund
Which sectors come into question?
The same as in the USA. For us, it's always about business-to-business software.
Which markets within Europe are you interested in?
We look at Germany, France, Great Britain and Scandinavia.
It could come down to the fact that they need local offices.
In the medium term, we'll be doing everything from our London office for the time being. We like to keep our teams small. For 20 years, we only had one office in San Francisco and just traveled.
What do you see in Europe when you come to the Superreturn?
I'm in Berlin the whole week, at most one day in London, and I like to just walk around the city before dinner. This time I want to spend more time in the eastern part of Berlin. I really like the restaurants there.
© manager magazin Verlagsgesellschaft mbH
Read the original article here.
