Global investment services firm, Frank Russell and HVB Group, the German commercial bank, have established a joint venture targeting the German and Austrian fund-of-funds market. Based in Munich it will create a series of investment vehicles for institutional and private investors in the region.
Director of alternative investments at Russell, Jeff Ganung, said the venture initially plans to launch three fund-of-funds targeting the global, US and European markets with a primary focus on venture capital and buyout funds. Further funds will be rolled out according to demand.
The funds will draw on Russell’s global private equity manager research team and HVB’s structuring and distribution capabilities. Axel Gruber of HypoVereinsbank and Hal Strong from Russell have become directors for the company. Commenting on Russell’s objectives in teaming with HVB, Ganung said: “We joined forces with HVB Group primarily to take advantage of their experience of distribution in the region.”
He underlined the value of setting up the venture with a quality partner that knows its clients and the market – something Russell was lacking in tackling the region. “With HVB, we are able to get the ball rolling,” he said. He declined to comment on the fund target.
The minimum investment for institutional investors in the fund will be euro5 million. Director Axel Gruber, said: “For our investors, the fund-of-funds structure will reduce the risk of this asset class.”
Germany and Austria are key markets in Russell’s European growth strategy and Ganung is confident there is an opportunity for developing a high quality brand in the region. He says: “Certainly having the second largest private commercial bank group in Germany on board will add a lot of credibility to the product.”
The managerial experience of the team is also a significant attraction for potential investors. With the recent turbulence in public markets bringing valuations down and creating potential for private equity investments, the firm has high hopes for the venture and anticipates launching similar alliances in these markets in the future.
There are no plans to list the vehicle as yet. The reason being, says Ganung, is that the fund is targeting a very select group of investors and being listed is not a priority for this target market.
Russell has been researching private equity investment managers since 1988 and manages private equity funds with commitments of over $2.4 billion.