VCM Capital Management and Golding Capital Partners have closed a second mezzanine fund-of-funds significantly above target at €238m. VCM Golding Mezzanine II was raised in nine months and will serve as a top-up to the group’s first fund-of-funds, which closed in June 2005 at €200m, above its original €150m target. VCM and Golding Capital Partners now manage more than €500m in mezzanine capital, available exclusively for investment in Europe and the US.
The majority of investors in the new vehicle are German institutional investors such as insurance companies, pension funds, savings banks, regional banks and family offices, as well as institutions from Austria, Luxembourg and Kuwait. VCM Managing Director Dr Hellmut Kirchner said: “Slowly but surely, German institutional investors are starting to feel comfortable in this category of investment. Thanks to the attractive income-risk profile and early distributions, mezzanine capital offers a comparatively low-risk gateway to alternative forms of investment. Investing in a fund-of-funds distributes risk even wider.”
Since their first mezzanine fund-of-funds was launched, VCM and Golding Capital Partners have already invested in over 20 European and US mezzanine funds and have indirectly financed over 250 high-growth businesses. Jeremy Golding, managing partner at Golding Capital Partners, said: “Our investors can already expect early distributions from these initial investments. That’s why this hybrid form of business financing – a cross between equity and borrowed capital – is an especially attractive investment tool for institutional investors, who need to meet ongoing obligations.”
Investors can expect a yield of some 10% from this second fund-of-funds taken over the entire term. This is based on an analysis of over 2,800 mezzanine transactions by CEPRES, a joint venture between VCM and the Johann Wolfgang Goethe University in Frankfurt.