Erste Asset Management

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.

RESPOND TO THE ARTICLE

Legal disclaimer

This document is an advertisement. Unless indicated otherwise, source: Erste Asset Management GmbH. The language of communication of the sales offices is German and the languages of communication of the Management Company also include English.

The prospectus for UCITS funds (including any amendments) is prepared and published in accordance with the provisions of the InvFG 2011 as amended. 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 conjunction with the InvFG 2011.

The currently valid versions of the prospectus, the Information for Investors pursuant to § 21 AIFMG, and the key information document can be found on the website www.erste-am.com under “Mandatory publications” and can be obtained free of charge by interested investors at the offices of the Management Company and at the offices of the depositary bank. The exact date of the most recent publication of the prospectus, the languages in which the key information document is available, and any other locations where the documents can be obtained are indicated on the website www.erste-am.com. A summary of the investor rights is available in German and English on the website www.erste-am.com/investor-rights and can also be obtained from the Management Company.

The Management Company can decide to suspend the provisions it has taken for the sale of unit certificates in other countries in accordance with the regulatory requirements.

Note: You are about to purchase a product that may be difficult to understand. We recommend that you read the indicated fund documents before making an investment decision. In addition to the locations listed above, you can obtain these documents free of charge at the offices of the referring Sparkassen bank and the offices of Erste Bank der oesterreichischen Sparkassen AG. You can also access these documents electronically at www.erste-am.com.

N.B.: The performance scenarios listed in the key information document are based on a calculation method that is specified in an EU regulation. The future market development cannot be accurately predicted. The depicted performance scenarios merely present potential earnings, but are based on the earnings in the recent past. The actual earnings may be lower than indicated. Our analyses and conclusions are general in nature and do not take into account the individual characteristics of our investors in terms of earnings, taxation, experience and knowledge, investment objective, financial position, capacity for loss, and risk tolerance.

Please note: Past performance is not a reliable indicator of the future performance of a fund. Investments in securities entail risks in addition to the opportunities presented here. The value of units and their earnings can rise and fall. Changes in exchange rates can also have a positive or negative effect on the value of an investment. For this reason, you may receive less than your originally invested amount when you redeem your units. Persons who are interested in purchasing units in investment funds are advised to read the current fund prospectus(es) and the Information for Investors pursuant to § 21 AIFMG, especially the risk notices they contain, before making an investment decision. If the fund currency is different than the investor’s home currency, changes in the relevant exchange rate can positively or negatively influence the value of the investment and the amount of the costs associated with the fund in the home currency.

We are not permitted to directly or indirectly offer, sell, transfer, or deliver this financial product to natural or legal persons whose place of residence or domicile is located in a country where this is legally prohibited. In this case, we may not provide any product information, either.

Please consult the corresponding information in the fund prospectus and the Information for Investors pursuant to § 21 AIFMG for restrictions on the sale of the fund to American or Russian citizens.

It is expressly noted that this communication does not provide any investment recommendations, but only expresses our current market assessment. Thus, this communication is not a substitute for investment advice, does not take into account the legal regulations aimed at promoting the independence of financial analyses, and is not subject to a prohibition on trading following the distribution of financial analyses.

This document does not represent a sales activity of the Management Company and therefore may not be construed as an offer for the purchase or sale of financial or investment instruments.

Erste Asset Management GmbH is affiliated with the referring Sparkassen banks and Erste Bank.

Please also read the “Information about us and our securities services” published by your bank.

Subject to misprints and errors.

Leave a comment Required fields are marked with *

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