IKB, Euromezzanine to market joint fund

German Mittelstand lender IKB Deutsche Industriebank and the French mezzanine provider are working together in a €100m subordinated debt fund.

IKB Deutsche Industriebank, a Düsseldorf-based corporate bank serving small- to medium-sized German businesses, has announced plans to step up its private equity-related activities.

The bank is currently in talks with Euromezzanine, the Paris-based mezzanine provider, about the launch of a joint mezzanine fund. According to an IKB spokesperson, the fund will have up to €100 million (€135 million) of capital and is expected to start making loans in the middle of 2005.

IKB also intends to grow the private equity-focused investment portfolio of IKB Private Equity, a stand-alone operation within the bank’s product offering. The unit currently manages a €300 million of direct equity and mezzanine investments. By 2007, the business hopes to be managing a total of €500 million of balance sheet money.

IKB Private Equity typically invests between €2.5 and €15 million in buyouts and development capital situations. Its focus is on established small- to medium-sized companies.

Established in 1999, IKB Private Equity originally included venture capital-backed early stage businesses among its target clientele. A series of losses prompted the unit to change direction, and venture capital is no longer part of the offering.

According to the IKB spokesperson, IKB Private Equity has since returned to profitability.