Successful launch of private equity fund of funds in difficult market environment

Successful launch of private equity fund of funds in difficult market environment
Successful launch of private equity fund of funds in difficult market environment
Share post:

In June, Erste Asset Management announced the first closing of its private equity fund of funds, “Erste Diversified Private Equity I” at EUR 80mn. In an interview, Thomas Bobek, Head of Private Equity Management, is very satisfied with the successful start of the fund.

Higher interest rates have caused turmoil on the markets this year. To what extent does the more difficult environment affect the private capital markets?

The changes in the interest rate landscape have also led to lower valuations on the private capital markets. In this respect, more turbulent times, the likes of which we are seeing at the moment, are not a bad time to launch a private equity fund. Entering now, at lower valuations, offers the opportunity for higher returns over the long term. We see that demand for private equity investments remains high despite the challenging situation on the markets. This is illustrated not least by our successful fundraising and the first closing of the fund of funds in Q2.

Talking about first closing: What are the next steps in the fund and what is your conclusion so far?

The second investment round of Erste Diversified Private Equity I is currently underway. Interested investors who want to participate in the positive development of the fund can still come on board until the final closing. The existing investors are very happy with the start and are currently considering increasing their investment. The portfolio has performed strongly so far. The uplift in TVPI (total value to paid in) is delivering a positive performance for our investors.

private equity fund of funds: Thomas Bobek

“We see that demand for private equity investments remains high despite the challenging situation on the markets.”

Thomas Bobek, Head of Private Equity Management
Erste Asset Management

Photo: (c) Michaela Mejta

The investment focus of Erste Diversified Private Equity I is on the Central and Eastern European region. What sort of potential do you see there?

There is a lot of know-how in various technology areas across Central and Eastern Europe. We are very convinced of the region, but private capital has not quite arrived there yet. Investors need to catch up. The exposure of insurance companies, pension funds, or even asset managers remains limited, while in the USA and in Western Europe institutional investors are very active in this asset class. Here we offer attractive solutions for entry-level investments. Our offer is aimed at institutional investors and qualified private investors.

In addition to the regional focus on Central Europe, our investments focus on venture capital and private equity funds that invest in high-growth small and medium-sized enterprises. These are, in particular, venture capital, growth equity, and buyout investments. For investors, this not only offers the chance of higher returns in the long term. A private equity investment, for example in our fund of funds, also brings real diversification to the portfolio.

How do you see the future in the private equity sector, and what are the next steps for your fund of funds?

Private equity has been one of the most successful asset classes in recent years. It is now well established and has developed into an important component of the strategic asset allocation of long-term investors. We notice that the demand for private capital investments is also on the rise in the private banking sector. In the USA, the share of companies financed by private equity is now about twice as high as that of listed companies, and this trend is also emerging in Europe. The asset class will therefore continue to play an important role in the future in general, but also for us at Erste AM. With our private capital offer, we address the great need for equity capital, we support founders and companies and thus promote growth, innovation, and the private capital market in our region. 

About the fund
The private equity fund of funds “Erste Diversified Private Equity I” was launched in June 2022 with a first closing at EUR 80mn. The investment focus is on Central Europe and the DACH region (i.e. the German-speaking region of Germany, Austria, and Switzerland). We diversify across the venture capital, growth equity and buy-out phases of funds investing in seed capital, start-ups, high-growth small and medium-sized enterprises, and established, successful companies. In addition to Erste Group, the anchor investor, the first investors include pension funds and insurance companies from Austria and abroad. Institutional investors and qualified retail investors can still participate until the final closing. The target volume is up to EUR 150mn.

For more information see this link.

Legal note:

Prognoses are no reliable indicator for future performance.


Legal disclaimer

This document is an advertisement. Unless indicated otherwise, source: Erste Asset Management GmbH. Our languages of communication are German and English.

The prospectus for UCITS (including any amendments) is published in accordance with the provisions of the InvFG 2011 in the currently amended version. Information for Investors pursuant to § 21 AIFMG is prepared for the alternative investment funds (AIF) administered by Erste Asset Management GmbH pursuant to the provisions of the AIFMG in connection with the InvFG 2011. The fund prospectus, Information for Investors pursuant to § 21 AIFMG, and the Key Information Document can be viewed in their latest versions at the web site within the section mandatory publications or obtained in their latest versions free of charge from the domicile of the management company and the domicile of the custodian bank. The exact date of the most recent publication of the fund prospectus, the languages in which the Key Information Document is available, and any additional locations where the documents can be obtained can be viewed on the web site A summary of investor rights is available in German and English on the website as well as at the domicile of the management company.

The management company can decide to revoke the arrangements it has made for the distribution of unit certificates abroad, taking into account the regulatory requirements.

Detailed information on the risks potentially associated with the investment can be found in the fund prospectus or Information for investors pursuant to § 21 AIFMG of the respective fund. If the fund currency is a currency other than the investor's home currency, changes in the corresponding exchange rate may have a positive or negative impact on the value of his investment and the amount of the costs incurred in the fund - converted into his home currency.

This document serves as additional information for our investors and is based on the knowledge of the staff responsible for preparing it at the time of preparation. Our analyses and conclusions are general in nature and do not take into account the individual needs of our investors in terms of earnings, taxation, and risk appetite. Past performance is not a reliable indicator of the future performance of a fund.

Leave a comment Required fields are marked with *

Your email address will not be published. Required fields are marked *