Germany has set up a new investment vehicle, the Deutschlandfonds, aimed at mobilising €130bn of capital, including from pension funds, to support the economy and the defence sector.
The fund, introduced yesterday by the federal government and state development bank KfW, is backed by an initial €30bn state guarantee, designed to incentivise broader private investment.
A fund of funds (FoF), Deutschlandfonds will target companies active in energy infrastructure, security and defence, DeepTech, AI, BioTech, ClimateTech, DefenceTech start-ups and scale-ups, as well as renewable energy and energy supply firms.
“We start with credit programmes through banks, and in the new year a new phase will start where the financing needs of energy supply companies are plugged through equity capital from other investors, including pension funds,” a spokesperson for KfW told IPE.
Initial investments will focus on industrial and small and medium-sized firms (SMEs), start-ups and scale-ups, and the energy sector, particularly utilities.
“KfW offers various financing instruments that in part start this year, and in part will be further developed in the next few years, that will attract investors’ capital through targeted government incentives,” the spokesperson added.
Pension funds can channel capital into Deutschlandfonds via the Future Fund II (Zukunftsfonds II). This vehicle will support DeepTech and BioTech companies, young firms in security and defence, and plug funding gaps for SMEs, according to the government and KfW prospectus.
“In Germany there is a funding gap for companies seeking capital to scale up, and it is specifically addressed there,” the KfW spokesperson said.
Germany’s minister for economic affairs and energy, Katherina Reiche, said the current economic environment “requires a large amount of investments”.
“It is crucial to direct private capital strategically towards innovation. The Deutschlandfonds mobilises private capital with public funds for this purpose, thus enabling effective investments in key areas for the future,” she added.
The Deutschlandfonds complements a broader public spending programme, including a €500bn Sondervermögen, aimed at reviving the economy amid a prolonged period of stagnation.
Bundesbank president Joachim Nagel said today that from the second quarter of 2026, economic growth “will strengthen markedly, driven mainly by government spending and a resurgence in exports”.
He forecast real gross domestic product to rise by 0.6 % in 2026, 1.3 % in 2027, and 1.1 % in 2028.
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