“It makes no sense to finance losses”

Mr Haindl, since 2010 you have bought a total of ten companies with start-up capital from the sale of your family business, Haindl Papier. How do you describe your role?
I’m a family investor. Like a family business, we think long-term, but act like a financial investor when it comes to making companies fit. Then we send managers from our holding there.

Did they have to move out more frequently during the pandemic?
The holding helped with the definition and implementation of immediate measures and, for example, with the negotiations with the banks and the KfW or LfA. Since the beginning of the pandemic, we have proven that we support our companies as far as we can.

Where did you have to help in particular?
Porcelain manufacturer BHS had a 90 percent drop in sales on a monthly basis. We supported and restructured the company. But what was important: We had very constructive negotiations with the employee side. This also applies to the shoe care specialist Bama. We knew that business would pick up again towards the end of the pandemic.

How much has the corona pandemic affected your business overall?
Of the ten companies, four performed better than planned in 2020, two performed poorly and four companies performed slightly worse but still okay. Despite the two outliers with BHS Tabletop and Bama, 2021 was the best year in the company’s history.

And to what extent have your acquisition plans changed?
While we didn’t consciously say we wouldn’t buy during the pandemic, we didn’t find anything that made sense. We founded Serafin Asset Management. In turn, they took over the majority in Alpora, a young Swiss company in the field of asset management. Alpora’s Innovation Europe Fund has just been recognized by Scope. The founding team is still almost all on board. We also want to expand this area further.

“When in doubt, investors are protected from themselves”

Have you lost interest in medium-sized companies or what moved you to enter this new business area?
We have not lost our desire for medium-sized companies. We’re just evolving. Alpora has an innovation-based algorithm. There, 10,000 journals and scientific papers, as well as publicly accessible data, are evaluated to analyze the innovative strength of individual companies. The most innovative companies are tomorrow’s winners.

So you become an asset manager?
Yes. Our idea: the family office for your pocket. We want to offer individual asset management from 10,000 euros. This isn’t for testosterone-charged jack-of-all-trades, but for those investors who want low-cost wealth management with a solid return that reflects their own risk profile.

And how do you want to identify the individual risk profile?
The respective risk profile is created using a detailed questionnaire – in case of doubt, the investors are protected from themselves. This is how the system type is determined. But you have to know that if you invest long-term, you need stocks.

So you want to jump on the new equity culture bandwagon?
Yes, but with the knowledge of an investor. The investment type determines the portfolio. In the future we also want to offer coaching. But also tutorials that convey stock market and economic knowledge.

In the portfolio of your medium-sized holding, you as an investor also had an insolvency and two separations from companies, what happened there?
The bakeries went bankrupt because the largest customer with more than 50 percent of sales left. We sold the candle business to our joint venture partner because of different opinions. Also before Corona we separated from the Weso-Aurorahütte.

You bought it from Viessmann. It was already clear to the company in 2018 that it no longer needed a foundry. Why did you access?
Yes, we knew business was down. What we did not foresee is that in 2019 the federal government will decide to extensively restrict the operation of oil heating systems from 2026. We thought that a drop in sales was further in the future and that we had time to bring alternative products to market. That was a misjudgment.

As an investor, don’t you need a more direct line to Berlin? The foundries are just saying that they cannot deliver enough for the wind turbines. Was the divestment possibly also a misjudgment?
That’s a different deal. Weso is currently in a better position than we thought. I would be very happy if the company continued to develop positively.

“Trade unions often use double standards”

What did you learn from the bad buys?
That unions often use double standards, but not always. We also had very constructive discussions.

Regarding you as a family investor?
Yes, it happened to me twice that the union side was of the opinion: Haindl has money, he should pay, no matter how the company is doing. As an individual shareholder, you should always keep adding money, but nobody asks that from the shareholders of a large Dax company. Every company has to earn money in the medium term. As a shareholder, I am willing to finance growth and investments, but financing losses over the long term does not make sense for a family business either.

You once said that you invest where it “smokes and stinks”, are you becoming more environmentally conscious and sustainable now?
The basic idea of ​​our business model has always been sustainable. We invest in companies that will produce in Europe in the next 20 years. But the momentum of sustainability has increased, so we have to do more. The concept of sustainability has also changed in recent years. We adapt to that.

A traffic light coalition in Berlin, the Green Deal in the EU and the EU taxonomy – shouldn’t you, as an investor, lead the way instead of following?
We have to deal with it. Porcelain plates are a thousand times better than plastic, but you need gas in the production, as in the entire ceramics industry. With CO2 pricing, manufacturers will no longer produce in this country, but elsewhere, without specifications. We Germans are welcome to act as driving forces, but we must not resort to activism that damages the domestic economy but does nothing for the environment.

In the meantime, listed corporations are preparing to overtake family businesses when it comes to sustainability, simply because they have to. Shouldn’t family entrepreneurs like you act faster?
There are already a lot of laws in this country and consumers are in a strong position. My experience is that in many cases consumers do not want to pay more for sustainable products, so they do not appreciate it. You can see it from the example of our film manufacturer, nobody buys sustainable films. I remember a time when paper was evil. Greenpeace came to Haindl because of the forests. Today paper is no longer bad, today it is the plastic bag.

But more and more consumers and employees are recognizing that the future belongs to those who are innovative when it comes to sustainability. As an asset manager, you rely on innovations, why not in the medium-sized holding company?
Currently yes. Only: we are too small to be the innovation leader on the big stage. We don’t have the resources for quantum leaps. Nevertheless, we are working on innovations and are also leaders in niche areas.

“Our focus changes more with sustainability issues than with the pandemic”

Your portfolio companies will use loans, so you are also dependent on ESG criteria.
So far we have not been denied a loan, not even for ESG reasons. From today’s perspective, we would not have bought the foundry. We bought the plastic foils ten years ago and counted among other things on the pharmaceutical industry as a customer. In 2020 we bought the manufacturer of plastic sheets, and my wife was also surprised.

But then thousands of stores had to protect their checkout staff in the pandemic…
That was good, of course, but whether it is sustainable remains to be seen. But it makes sense, otherwise the polycarbonate sheets are used, among other things, for stops in local public transport, but also for the housing of modern machines in industry. Both have a future. We are already thinking a lot more about sustainability today and are also looking at how we can further develop the companies in our portfolio.

Three years ago you said that you were closer to the company than the Werhahns and the Haniels, but what is your vision, your corporate purpose?
We talk a lot about purpose, but it shouldn’t sound as marketing-related as it does with many DAX companies. We are one of the founding families of Bon Venture, a venture capitalist for social entrepreneurs, I am on the advisory board there. We at Serafin want to be a successful strategic investor – not only financially, but also sustainably successful in the long term. It’s just as important to us to be a good employer, and we’ve done a lot for that too.

Which companies are currently on your desk?
We see companies that have benefited insanely from the pandemic and those that have suffered particularly badly. Little in the middle.

Has the pandemic changed your focus?
We still like to buy spin-offs from the core business of large corporations, such as polycarbonate sheets from Covestro. Our focus has changed less as a result of the pandemic than as a result of sustainability and energy issues.

But you still invested in the media megatrend by investing in Herbert Kloiber junior’s production company, Night Train Media. How happy are you with it?
It is developing much better than expected. We are two years further than planned and have already made an acquisition. Rather, the pandemic has helped because streaming services are booming. Through Herbert’s network, we got involved in projects we never dreamed of. We’re flexible there, don’t have a large apparatus, which is an advantage.

When do you want to reach one billion euros in sales?
We could have done that by the end of 2021, but we didn’t buy any more during the pandemic, so we have a turnover of almost 900 million euros. We want to be profitable, diversified and crisis-proof.

Crises are bad, but failure is seen as an important experience, why did you fail?
I don’t like all that Silicon Valley failure talk. If failure is an option, you’ve already lost before you start. You experience defeats and should get up again afterwards. I prefer to ask: What are the new options? I often come up with better stuff when I’ve been defeated. If I had gotten every job before, I wouldn’t be where I am today.

Mr. Haindl, thank you very much for the interview.

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