Germany’s Winning Streak, 2008-2014 YTD – July 2014

by Chloe Wong

  • 28 Jul 2014
  • PE

Out of all the Eurozone countries, Germany is continuously singled out as one of the most prominent nations within the private equity industry. According to Preqin’s Funds in Market online service, there are currently 85 private equity funds targeting Germany as part of an exclusive or wider geographic focus, representing over a fifth (22%) of the aggregate capital aimed at Europe (€146bn). Comparing this to 2013 when there were only 75 funds targeting investments in Germany, it is clear that there has been an upswing in appetite from investors and fund managers alike. On a global scale, the total capital aimed at Germany as part of an exclusive or wider geographical focus represents 6% of the amount (€561bn) targeting funds worldwide. 

The largest fund to close so far in 2014 with an investment focus on Germany is First Reserve Energy Infrastructure Fund II. The infrastructure vehicle held its final close in June on $2.5bn, significantly exceeding its $2bn target. According to Preqin’s Fund Manager Profiles database this vehicle was raised by First Reserve Corporation, a global energy-focused private equity and infrastructure investment firm that has raised $19bn in total capital commitments over the last 10 years. The second fund in the series follows the same strategy as its predecessor and invests across the energy spectrum. 

After buyout, the private equity fund type to secure the most capital from 2008 to 2013 is real estate. Germany’s relatively stable economy and low interest rates continue to attract investors, and during this five year period, real estate funds garnered 32% of the aggregate capital raised by all private equity funds targeting Germany. Real estate is indeed a very popular sector within Germany and has already accumulated over $6bn this year, out of a total of €111bn raised by all German-focused private equity funds. 

Of the 85 private equity funds currently in market aimed at Germany either exclusively or as part of a wider geographic focus, 33% are being raised by German fund managers, targeting an aggregate €5bn. The UK is not far behind, with 25% of the 85 vehicles managed by UK-based fund managers. However, appetite from the UK appears to greatly outweigh German GPs, as UK managers are collectively targeting double the amount sought by German fund managers. Nine of the funds are being raised by managers headquartered outside of Europe, eight are from the US and one is from China. Data shows that these US fund-managers are targeting €318mn more in total capital than their German counterparts for such vehicles. These statistics provide evidence for the healthy appetite for private equity opportunities within Germany and indicate a real global recognition of Germany’s vibrant investment prospects. 

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