Germany’s change of heart

The initial reaction in Germany following the very public comparison of Anglo-Saxon private equity financiers to swarms of “locusts” by Franz Muntefering, now Germany’s vice-chancellor, was one of deep suspicion and disdain for an investment model that threatened to ride roughshod over the patrician relationship between capital and society in Germany.

For the first time funds of private equity funds in Germany are being created specifically for the retail market. The disdain has changed to fascination for an asset class that, social contract notwithstanding, offers returns significantly ahead of those available through the more traditional investment models.

Research undertaken last year by Greenpark Capital, a secondaries fund manager and Unigestion, an investment manager show that German institutions are rapidly increasing their allocations to private equity, mostly via fund of funds and secondaries. It seems they are to be joined by retail investors. More evidence of an asset class that is growing up?