Allianz to step up mezzanine commitments

Allianz, the German insurance group, is further diversifying its investment activity by increasing its participation in mezzanine debt. Thomas Putter, managing director of Allianz Capital Partners the private equity unit launched in 1998, said the firm currently has two mezzanine investments worth $140 million in its portfolio and is looking to intensify its efforts in this area.

“Allianz is very interested in the burgeoning mezzanine market in continental Europe, especially in the German-speaking region and UK,” said Putter. He is currently working on the structure of a mezzanine vehicle and expects to make an announcement about it in a few months time. Eventually he anticipates a separate team dedicated to mezzanine but in the short term Allianz Capital Partners will increase its staff from 32 to 40.

There are a number of motivations for Allianz to expand its mezzanine activities, which Putter believes represents an attractive, reliable risk for the insurer. He said: “We are seeing an increase in the number of growth capital opportunities where equity is not always the most appropriate solution.” Because Allianz does not generally participate in buyout auctions it is viewed as a neutral party and can work with equity sponsors to provide a flexible, tailor-made mezzanine package in these deals. Putter said Allianz will be looking for deals where it can really add value.

A capital commitment has not yet been agreed with Allianz, which will increase its commitment to mezzanine investments from its balance sheet. Allianz Capital Partners has made equity investments of EURO1.1 billion since its launch in 1998 and Putter said he would be very happy to see Allianz’s mezzanine commitments reach this level within a similar time frame. No figure has been agreed with Allianz yet. It will not affect the level of capital available to Allianz Capital Partners for private equity investments.

Allianz Capital Partners has invested in 14 deals across Europe, committing between $20 million and $250 million to growth financing and buyout deals.

The firm has no particular industry specialisation and has participated in transactions such as Messer Griesheim (industrial gases), Schmalbach Lubeca (packaging solutions), Fairchild Dornier (airplane manufacturer) and Tank&Rast (service stations).