The German private banking unit of Credit Suisse is launching a private equity fund of funds tailored to attract the bank’s private clients.
The bank has hired Munich-based Golding Capital Partners, which has previously assisted German financial institution HCI on its private client offerings, to structure and manage CS Venture I, which is hoping to capitalise on the downturn as a means of securing best value for investors. The fund, which is aiming for a E25m total, will spread its investments equally across US and European buyout and venture capital funds.
Commenting on the timing of the project, Jeremy Golding, head of Golding Capital Partners said: “The best time to invest is during a recession,” said. “It is true that the market is not positive at present but investing now means that we will reap the benefit when the economy picks up.”
The fund is being launched at a time when the German economy is heading into recession, and promised reforms to tax legislation have been slow to arrive. However, Golding believes that private investors will be willing to commit to the fund. “The demand among wealthy investors in Germany for private equity fund of funds products is proven. Affluent investors in Germany are familiar with closed-end structures and understand the long-term nature of private equity investing. It’s a courageous move by Credit Suisse but also a positive one.” Goetz Jaeger, head of alternative assets at Credit Suisse Germany said he believed the timing was right for the group’s private banking clients to invest in private equity.”
CS Venture I will commit to around eight to ten private equity funds, investing up to E5m per fund. Golding has already held discussions with a number of fund managers, including Charterhouse and German manager Nordwind, although no commitments will be made prior to capital being raised.
Golding will manage the fund selection and due diligence process. Investment decisions will be taken by a joint investment advisory committee with representatives from both Credit Suisse and Golding Capital Partners.
Golding said the bank plans to raise similar funds on an annual basis. Future offerings are intended to attract Swiss private banking clients also. “We have kept the fundraising low so that it is small and flexible, although it is still quite a big target for a fund solely for private banking clients.”
CS Ventures I enters a competitive market targeting high net worth individuals (HNWIs). The largest German fund of funds manager targeting HNWIs is VCM, based in Munich, which has E800m under management. Von Braun & Schreiber, which has previously concentrated on institutional investors, is also offering to private clients. Other participants include Extorel, Frankfurt-based Feri Alternative Investments and numerous Swiss firms catering to German clients.