DACH fundraising on the up

Half a dozen funds based in the DACH region are currently on the fundraising trail. German private equity houses DBAG and Augur Capital are targeting €250m each while private equity firm Afinum has ambitions to raise around €500m.

Afinum partner Gernot Eisinger has noticed changing trends on the LP front. "LPs, especially institutional investors, are reducing their GP base mainly driven by their experience with individual GPs and to reduce their administrative cost," says Eisinger.

The latest Afinum fund was spawned by a government initiative and was set up by cornerstone investors KfW and Commerzbank. It will exclusively target German Mittelstand companies, with the intention to refine the balance sheets of businesses that struggled during the crisis or are looking for expansion capital. However, the whole programme is no charity and the fund is looking to achieve returns of between 17-20%.

Although the team has already raised €200m, Eisinger believes that changes in the legal backdrop adds further hurdles to the fundraising situation: "The discussions around Solvency II make it very difficult for many institutional investors to progress on their allocation decisions, which leads to very low investment activity in private equity."

In Switzerland, Constellation Capital associate director Marinus Schmitt knows from experience that investors are still very cautious when investing in private equity funds, and tend to favour region- and sector-focused vehicles. "LPs like everything with a small capital expenditure and sectors where companies managed to survive the crisis. Current favourites are life sciences, healthcare and of course financial services in Switzerland as people can relate to it," notes Schmitt.

Constellation is just about to raise its first fund with a target of €100m. The company is an experienced player in the small-cap segment as it has already made 14 investments on a deal-by-deal basis. Its investors include high-net-worth individuals, family offices and institutional investors. Schmitt believes that funds which have been on the market for a while and had institutional investors backing their previous vehicles are likely to receive further funding. "If you start fresh, it is of course difficult," he points out.

From fundraisers' perspectives, the DACH region is looking better than in previous years after several successful fund closings in recent weeks. In April, private equity firm Auctus closed its third fund at €150m and CMP Capital Management Partners announced a closing at €175m, exceeding its target by €25m.

Having been very quiet on the private equity front in recent years, Austria will follow the current fundraising trend soon as Invest Equity is looking to launch its next fund in the near future. Figures released by the Austrian Private Equity and Venture Capital Organisation show positive developments as banks, asset managers and insurance companies have started to engage in private equity fundraising activities.

Despite a few hurdles GPs in the DACH region still have to overcome, the situation is looking positive again and the newly-launched funds will hopefully pave the way for further successful efforts.

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• Topics
• Fundraising
• DACH
• Switzerland
• Germany
• Austria