Aareon is the largest housing software player in Europe, co-owned by a listed German lender, Aareal Bank. Its software is used by mid-market enterprise customers who manage 1,000 to 200,000+ residential units each. Across its 5 geographies, Aareon powers the housing of over 11 million families in Europe.
Aareon’s software helps these organizations manage their financials, track and analyze rental payments, pay employees, and manage their contractors. Aareon also helps these organization further digitize and automate other workflows with digital solutions such as tenant portals and contractor apps.
Advent had tracked Aareon as a high-quality software subsidiary of a listed company for a number of years as part of its proactive search for both vertical software leaders and bank partnership opportunities.
Advent was ultimately the partner of choice for the bank due to the unique combination of strengths. First is our deep experience in Vertical Enterprise Software, including our US experience of investing in Conservice and industry advisors like Daryl Rolley, who was the former COO of a key US peer. Additionally, Advent has a strong track record in partnering with banks to develop technology-based subsidiaries. Finally, we have a strong local presence on the ground in Germany.
We believe Aareon has the potential to be Europe’s Proptech leader. The company has a stable base from which to develop further; it provides high value at a low cost for its customers, as software spend is just 1-2% of operating expenses for Aareon’s customers, while adopting a new digital solution can have a 5x return on investment. This allows Aareon’s customers to focus on providing good housing for their tenants and in turn results in low churn and very high customer satisfaction, which in 2021 was four times that of competitors.
In partnership with the bank and Aareon’s management, we have set ambitious goals for the next five years. We see an opportunity to accelerate the business with two high-impact levers: (1) improved go-to-market and cross sell of digital solutions to existing customers and (2) add-on M&A both in-filling geographies as well as adding new capabilities.