CHAPTERS Group AG
CHG.DE - Serial Acquisitions, Impressive Shareholders, and an Excellent Strategy.
Founded (in its current form): 2018/2019
Current Price: €24.60
Market Cap: ~€440m
I’ve known of CHAPTERS Group AG since the end of 2023. Software isn’t exactly my primary focus and despite family I have living in Northern Europe I tend to find their regulatory environment… difficult, let’s put it at that. I saw some comparisons to CSU early in the year and made a very tiny starter position. What caused me to really begin investing in CHAPTERS Group was a Constellation Software shareholder/analyst call on May 13, 2024. On that call the following exchange took place (h/t @VBATCAPITAL for the highlights/transcript):
Mark Leonard’s comment was essentially bull-porn. While he is referring to Arcadea, a privately held vertical-SaaS serial acquirer, similar to CSU it reminded me of CHAPTERS Group – a company I had previously dismissed. From here I sat on it for some time and asked around my network of fellow fintwit users, one response I received was: “How do you come up with a German small cap?” There’s an overarching theme I keep going back to: European software companies trade at a lower multiple compared to their US peers and I am a sucker for “value.”
Background
CHAPTERS Group was founded in 1998 near Frankfurt, originally the founded as a software startup that focused on German hospital procurement. That procurement business, Medical Columbus, was sold in 2018 and the corporate structure was “transformed” into a holding company with the following mission statement: “to provide mission critical services to customers not only in Germany but across Europe (and in some cases the world). Prior to being CHAPTERS Group, which changed following the AGM in 2023 the company was known as MEDIQON Group.
CHAPTERS Group High Level
CHAPTERS Group AG is made up of five platforms and 41 operating companies. For those unfamiliar, a platform company is a “platform” for further acquisitions and growth. The combined platforms currently do >€92 million in revenue and >€25 million in EBITDA.