Germany sees launch of biggest fund of fund since Lehman collapse

GERMANY - LGT Capital Partners and Solutio have launched Germany's biggest private equity fund of fund since the collapse of Lehman Brothers.

The launch coincides with reports from Fidelity International that the German fund of fund market has recovered to pre-crisis levels.

Originally drafted for €500m, LGT's investment fund has amassed €562m in assets according to Solutio. The funds come from over 30 investors, including pension schemes, insurance companies and foundations.

Maximilian Brönner, a partner at LGT Capital Partners said: "One of  the factors that led to success above and beyond our expectations was the sustained yield of what came before, especially 2004's launch of Crown Premium II.

"Additionally, the fact that our Crown products weathered the financial crisis better than comparative products and other forms of investment helped," he said.

Dr Rüdiger Kollmann, managing director of Solutio, added: "Private equity, as an asset class, is by now well established with institutional investor, while being far from a fast-selling asset. However, fund managers still need to convince management boards about long term and anti-cyclical investments."

Kollmann said further investment choices were being made on a much more selective basis.

Crown Premium IV's portfolio is said to consist of 25 investment funds, with 90% coming from buyouts and the remaining 10% from venture and growth capital. Expectations are that secondary transactions will make up to 30% of all transactions eventually.

Almost 90% of funds come from established investors, with insurance companies being the largest group at 47%. Versorgungswerke account for a further 22% of funds, followed by foundations and family offices, with 15% and Pensionskassen with 12%.

Fidelity International's figures show the German fund of fund market to have recovered to levels last seen at the end of 2007.

The news mirrors yesterday's announcement by asset management umbrella group BVI that overall investment inflows had rebounded to 2007 levels.

Fidelity reported that the country's fund of funds boast €52.6bn in assets; an increase of 15% over the end of 2008.

Deka laid claim to almost 30% of the market, with €15bn of all assets, followed in distant second by DWS with 9.8% of the market, while Union Investment came third, laying claim to just over 8% of all assets.