Minority Participations: 1965–1975

It was the “economic miracle” that created the demand for minority-based participations. Mid-cap companies in Germany required injections of growth capital as they expanded. German GDP between 1950 and 1973 increased almost four-fold, and tripled on a per capita basis.’ The challenge for medium-sized companies was to find the capital to finance this growth. The house bank could not always be relied upon to meet all of a company’s needs, especially when increases in debt were not matched by further injections of equity. H.E. Büschgen, in his chapter “Die Deutsche Bank von 1957 bis zur Gegenwart” (published in Die Deutsche Bank von 1870 bis 1995) summarised the challenge: In the mid 1960s, many medium-sized companies, with no direct access to capital markets, found that they were only able to finance rapid growth using their own resources to a limited extent. It was against this background that the banks began founding Kapital-beteiligungsgesellschaften (capital participation companies), in order to provide small and medium-sized companies with additional equity.2