„Happier pets. Happier people“. That's the slogan of pet supplies retailer Fressnapf, founded by self made billionaire Torsetn Toeller. The 58-year-old founder and Chairman of the Board of Directors of Fressnapf SE is selling shares in the billion-euro company based in Krefeld for the first time – to a private equity investor. Cinven, also well known in Germany as co-owner of the generics group Stada, is selling its smaller Italian competitor Arcaplanet to Fressnapf – and in a second step is acquiring a minority stake in Fressnapf in a separate transaction.

According to financial circles, the stake is is less than 20%. Toeller remains the majority owner of Fressnapf. Cinven had acquired the Fressnapf subsidiary Maxizoo Italia shortly after the takeover of Arcaplanet in 2022, in the course of which Fressnapf acquired a minority stake in Arcaplanet. After two years, Cinven is now selling the enlarged company with 560 shops and a turnover of 700 million euros to the business partner.

„I am very pleased to welcome Cinven as my first external shareholder in the Fressnapf Group,“ says Toeller. And Cinven Co-Managing Partner and Head of Germany Bruno Schick adds that "our relationship with Torsten goes back many years, and we are delighted to expand this strong partnership through the Cinven funds' investment in Fressnapf.“

Cologne-born Toeller – a married father of three children in his second marriage – is not the only one venturing into an experiment with an uncertain outcome. The minority stake is also a special step for a private equity firm like Cinven. Since KKR, the mother of all private equity firms, was founded in 1976 by Jerome Kohlberg, Henry Kravis and George Roberts, the industry has been best known for majority stakes in unlisted companies (buy-outs). However, this has become more difficult due to the high level of debt financing, and recent high interest rates. Private equity is increasingly focussing on minority shareholdings in family businesses or spun-off parts of groups. In the past, this would have been inconceivable, because financial investors wanted full control.

The undervaluation of a family-run company that is not listed on the stock exchange is often the motive for an investment. Examples include the recent joint investment by EQT and Kühne-Holding in the long-distance bus provider Flix, KKR's minority stake in the Bremen-based family-owned space technology company OHB, the „German SpaceX“, or the minority stake held by BDT Capital, the investment company of „Warren Buffett's banker“ Byron Trott, in the Stuttgart-based building technology company Exyte (formerly M+W Group), which builds semiconductor factories.

Toeller, who lost around 200 million euros with his investment in René Benko's Signa holding company, has no reservations about financial investors. In 2014, he even founded a private equity fund called Genui himself. However, it can be assumed that Toeller demanded that Cinven acts as a silent partner in Fressnapf in the literal sense. For too long, he alone had the say in the company that he himself had created from scratch.

After graduating from high school in Dormagen in 1985, Toeller completed an apprenticeship in retail at Allkauf and then went on to study. After a work-related trip to the USA, he developed the idea of a discount pet speciality store for Germany, inspired by American super pet stores. In 1990, the then 24-year-old Toeller opened his first speciality store for pet food and accessories in Erkelenz. From 1992 onwards, stores were opened as franchise systems, and in 1997 for the first time in Austria.

The Fressnapf Group now has more than 2,600 shops in 14 countries and a turnover of around 5 billion euros. This makes Fressnapf a role model for its most important competitor Zooplus. The Munich-based online pet food retailer, which is jointly owned by the financial investors EQT and Hellman & Friedman, has a turnover of 4 billion euros and a market share of 50% in Europe.

Zooplus wants to get to the point where Fressnapf already is. According to industry experts, Fressnapf's margin on its own products is in the region of two thirds. Fressnapf's own brands account for around 80% of sales. This high share is achieved, among other things, by the employees in the Fressnapf shops recommending the company's own products to customers.

EQT acquired Zooplus together with rival Hellman & Friedman in 2021 for 3.7 billion euros. At the time, this corresponded to 58 times the operating profit (EBITDA) – a remarkable price. It is therefore clear that Fressnapf, which is significantly larger and far more profitable, must be worth several billion euros.