Unquote

Mixed messages

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Recent German legislation has been anything but welcoming to foreign investors. Both the Risikobegrenzungsgesetz and Aussenwirtschaftsgesetz are widely seen as a deterrent against what certain parts of the government seem to still regard as hordes of ravenous foreign predators laying siege on Germany (I will spare the tired insect metaphor). This not only addresses private equity, but also sovereign wealth funds

But just as sovereign wealth funds were welcome to take some of the pressure off Wall Street by pouring their huge reservoirs of liquidity into the financial industry, so has Lone Star been welcomed to acquire the Deutsche Industriebank IKB for a reported EUR150m. There is clearly irony in the fact that it was a foreign investor who made the best offer for an important source of financing in the German Mittelstand. EUR150m may be a fraction of the hoped-for price, but it is a foreign investor who is helping to remove a significant liability from the state's balance sheet.

Another irony is that an ambitious offshore windfarm project is being financed with more than EUR1bn from Blackstone (see cover). It may have been opportune to forget that 10% of Blackstone is owned by China Investment Corp, the very same investor type so unwelcome to the German policy-maker. And no-one will doubt that a windfarm as a major source of energy can be considered a vital installation, especially in ever more energy-hungry times.

Maybe the most encouraging thing about the German government's inconsistency when it comes to foreign investors is the fact that it isn't preventing the deployment of capital that finances economic change, critical infrastructure projects and the consolidation of the shaken financial industry.

Yours sincerely,

Mareen Goebel

Editor, Deutsche unquote"

Tel: +44 20 7004 7462

mareen.goebel@incisivemedia.com.

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