Germany-based banks have started to provide private equity funds to small-scale investors in the country, with more lenders aiming to tap into the growing asset class.
The move comes as private capital groups are working on finding new sources of funding, with institutional investors showing hesitancy in committing more until prior investments return cash. According to Deutsche Bank officials, German retail investors represent one of the world’s largest untapped pools of wealth, and private companies are keen to gain access.
At a global level, similar efforts are currently underway. For example, in the US, President Donald Trump signed an executive order to open the USD 9 trillion retirement savings market to a broader range of assets. In addition to this, UK wealth managers are working on scaling their offering of private market products to retail clients.
Democratising private equity
Investment thresholds range, with Deutsche Bank requiring a EUR 10,000 minimum and at least EUR 200,000 in client assets. On the other hand, Trade Republic joined forces with EQT and Apollo to deliver exposure from EUR 1. Additionally, BlackRock partnered with UniCredit’s German arm, HVB, and online broker Scalable Capital to facilitate access to clients to private equity with a EUR 10,000 minimum. Traditionally, Germany had a reserved view of private equity, with the country’s Social Democratic officials saying in 2004 that buyout investors were harmful across companies. Despite this, other people familiar with the matter at hand indicate a more welcoming environment in Germany for alternative asset managers.
Moreover, private equity represents a substantial expansion opportunity, as detailed by representatives from Trade Republic. They also underlined the increased early demand for the company’s private markets launch and see the asset class as a core component in the portfolios of retail investors over the next five years, regardless of general scepticism in the country around capital markets, as Germans are interested in investing in private firms.
When it comes to private equity, people’s perspectives are shifting over time, with attitudes significantly changing from the early 2000s, with the industry no longer being faced with the same stigma.
