VCM, Golding find €200m for mezz FoF

The two Munich-based private equity firms have closed Europe’s first subordinated debt fund of funds structure aimed at German investors.

VCM Golding Mezzanine, a fund of funds managed by Munich-based fund investors VCM and Golding Capital Partners, has closed on €200 million.

At launch in 2003, the fund had been looking to raise €150 million.

Since then, the fund has made 12 investments in mezzanine partnerships in Europe and the US, and 40 percent of the fund is already committed. According to Hellmuth Kirchner, CEO of VCM, investors should expect distributions coming back from these early investments in the first year already.

Prior to launching VCM Golding Mezzanine, the two managers teamed up with the Center of Private Equity Research (CEPRES) at the University of Frankfurt to build a database of approximately 1500 mezzanine transactions completed in Europe and the US between 1986 and 2002.

According to Jeremy Golding, founder of Golding Capital Partners, quantitative analysis of the data confirms that mezzanine investments offer an average return of approximately 10 per cent, low default risk and limited correlation with other asset classes such as quoted equities and corporate bonds.