A senior German politician has told journalists Germany needs laws to help corporations in some strategically important domestic markets protect themselves against the growing influence of financial investors.
Struck, a former minister of defence whose left-of-centre party is part of Germany’s grand coalition government alongside Chancellor Angela Merkel’s conservative CDU, said limitations on private equity firms buying into German businesses should be made law.
Restricting private equity ownership of companies, especially in key segments of the economy such as car manufacturing and utilities, to 25 percent could be appropriate, Struck said. A 25 percent threshold is already in place for German defence companies.
German politicians are currently debating how the country’s key economic assets can be protected against cash-rich sovereign funds, which may be looking to invest in the country for not just financial but also political reasons.
Struck’s comments extend the debate to include private equity and hedge funds. He said his party was ready for a confrontation with the CDU over the issue in the autumn.
His stance has re-ignited the debate started by Franz Müntefering, Germany’s deputy chancellor and former head of the SDP party, in April 2005. Among the comments attributed to Müntefering was the observation that financial investors “fall like locusts over companies. These they graze bare and then move on.”
Appetite from German investors for exposure to the asset class has grown unabated according to a 2006 study by fund of funds manager Adveq, while primary fund managers have enjoyed increasing levels of deals.