Christian Hollenberg, the driving force behind Orlando Management, the German special situations firm, is leaving the firm after handing over the day-to-day running of the business he co-founded seven years ago.
Hollenberg told PEO: “I decided not to be part of Orlando 2 [the fund closed in November last year on €255 million ($344 million)] and slowly withdrew to take some time off. There is a natural degree of attrition: a desire to do something different.”
He said the last seven years had been exciting but tough in terms of the workload and he wanted to spend more time with his family. “It is time to pay back some family mezzanine debt: it is a bullet repayment with payment-in-kind,” he added.
The split from the four remaining partners Hans Gottwald, Henrick Fastrich, Florian Pape and Georg Madersbach is amicable. “It is not so small a firm that everything collapses when one person leaves,” Hollenberg said.
He retains a full economic interest in the firm’s €163 million first fund, which is fully invested and generating an internal rate of return of more than 40 percent.
But the break with his family will be brief. Hollenberg said: “I will be back in the market at the beginning of 2008 with a new and different team and a slightly different concept. 2008 will be a completely different market after a difficult and worrisome 2007. I am fine-tuning strategic choices.”
He said Orlando was poised between being an institutional firm and an entrepreneurial outfit seeking capital wherever on the cheapest terms. His new venture will not seek to mix the two modes. He said: “That is one thing I have learned from the current operation.”
Orlando came under fire for the structured element in its second fund, allowing the firm to raise capital cheaply by offering an absolute-return product aimed at funds of funds and private banks selling to retail investors, with lower return expectations.
However, it did not prevent institutional investors from backing the firm’s move into Italy through an affiliate firm Orlando Italy, which closed its debut fund this May on €180 million. Investors also backed the expansion of its product range to include a €205 million German real estate fund.