Versorgungswerk der Zahnärztekammer Berlin (VZB), the €2.2bn pension fund for dentists in Berlin, Bremen and the state of Brandenburg, has blocked the disbursement of what it described as a risky loan to a portfolio company that has since filed for insolvency, in what appears to be an effort to improve its investment oversight following previous criticism.
VZB has declined to provide further funding to EV Digital Invest, a crowdfunding and mezzanine finance platform and a licence partner of Engel & Völkers, the Hamburg-based international real estate group, in order to protect scheme assets from “untenable risks”, the pension fund said in a statement.
The pension fund, which is the majority shareholder in EV Digital Invest, said the company depended on the loan to pursue its restructuring and meet settlement claims from investors.
“This constituted a highly speculative, illiquid loan to a company in need of restructuring, and this fundamentally contradicts the legal requirements for the investment of a pension fund,” VZB said in the statement.
The move comes in the wake of criticism directed at VZB for past investment choices that resulted in significant losses. The fund was one of the principal backers of Element Insurance, a Berlin-based insurtech start-up that filed for insolvency earlier this year.
Although VZB initially defended its decisions, it has since acknowledged that its financial situation has been strained by a strategy initiated in 2013 involving real estate and direct company investments, which has led to substantial write-downs.
A statement on its website indicates the fund is now undertaking a full review of its corporate holdings and associated loans.
As part of this review, VZB has commissioned external, independent experts to assess its investment exposures and deliver recommendations.
EV Digital Invest has now entered insolvency proceedings, which it attributes directly to VZB’s refusal to disburse the loan – funds it said were required to settle an extraordinary liability. The company’s legal advisors claim that VZB’s decision represents an intentional breach of contract and a violation of fiduciary duty.
VZB has rejected this interpretation, asserting that the loan agreements fell outside the scope of its statutory and legal obligations, and were in breach of mandatory regulatory provisions.
In early July, the Berlin Regional Court sided with the pension fund, ruling that the loan agreement in question was legally invalid and that EV Digital Invest had no legal right to demand the disbursement, according to German media reports.
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