Finance solutions

Mounting regulatory requirements for bank lending are forcing institutional investors to seek new investment opportunities in special niches via fund structures. What is more, new approaches are being taken to asset and investment allocation – not least of all against the backdrop of the protracted low interest rates – in response to changes in the range of investment openings for institutional investors.

This is increasingly pushing private debt as an asset class, a common form of investment in the Anglosphere, into the limelight for German investors as well.

The term “private” in “private debt” means that the debt is not publicly traded. This form of finance is not provided by banks but by non-banks such as funds, pension funds, insurance companies and family offices. Alternative, non-liquid investments are expected to generate more attractive returns, more stable cash flows, greater opportunities for diversification and lower portfolio correlation than comparable exchange-traded bonds. The greater complexity in structuring private-debt investments also fetches a premium on conventional fixed-income instruments.

Private debt as a form of investment is not structured, meaning that it comes in many different flavours. There are a number of forms, such as senior debt, junior debt, mezzanine debt in the form of hybrid debt/equity finance as well as distressed debt for funding companies in crisis situations.

Investors require experts who are able to identify and acquire these loans as well as evaluate, structure, manage and monitor the resultant risks. These experts must be able to rely on long-standing, mutually trusting relationships with investors as well as the companies they finance.

We are ideally positioned to achieve this.

AkquiVest €300 million Fund

With capital of €500 million, the AkquiVest Fund is organised as a SICAV in accordance with Luxembourg law. It is being used by a highly renowned German insurance group to pursue a long-term conservative and highly solid investment approach. We invest in new and existing leveraged finance situations in the German SME segment. AkquiVest GmbH, a company owned by Munich-based G.I.A. – Gerhold Investment Advisors, acts as the investment and portfolio advisor for this fund.

The AkquiVest investment approach at a glance

The AkquiVest fund pursues a solid and conservative long-term investment approach:

  • Establishment and management of a portfolio of senior secured acquisition finance loans.
  • The flexible investment focus covers individually structured primary transactions as well as secondary market transactions, recaps and investments in existing loan portfolios.
  • Structurally, the AkquiVest loan documentation is comparable to the standard documentation customarily issued by lending banks but is leaner and more efficient. It is in German and expressly no LMA required.
  • In the case of joint finance with banks, we are happy to use the banks documentation. This makes us more efficient and less expensive in terms of documentation requirements than international debt funds.
  • The AkquiVest Fund can place individual financings with final hold in a range from €10 million to up to €50 million. These can be structured either individually or via a consortium or club deal.
  • No Unitranche but classic structuring in two tranches, an amortizing Term Loan A with a repayment structure and term of up to 6 years and a Term Loan B with no repayment structure (bullet) and final repayment after 7 to 8 years.
  • The RCF facility is integrated in the overall structure and typically managed locally by the borrower’s existing principal bank.
  • The finance is managed solely by the AkquiVest team during the entire term.
  • All decisions are made within the AkquiVest structure in a documented, precise and swift manner.

The advantages over bank finance and international credit funds

We speak the language of private equity business and are familiar with all its nuances.

  • Speed and reliability:
    Swift and reliable finance decisions.
  • Sole underwriting:
    The often seen “second bank” is not required.
  • Largely standardised loan documentation:
    Reduction in unnecessarily long discussions between attorneys and advisors – saves time and external costs.
  • Fair and market-oriented interest rates:
    Oriented to banks’ German lending business rather than Anglo-Saxon unitranche or high-yield finance – competitive in structure and pricing.
  • Preferably fixed-rate interest agreements:
    This means that we offer stable long-term interest rates in the current low-interest environment (no EURIBOR) to avoid additional costs and the expense of interest hedging normally required by banks – oriented to SMEs, high forward planning visibility and inexpensive.
  • Open for flexible recaps based on actual risk exposure:
    Recaps as an efficient instrument for boosting the return (IRR) on private equity funds.
  • Long-term, mutually trusting and stable relations:
    Our financing approach and understanding of risk is long-term in nature. We are committed to this in good times as well as in challenging market phases – strategic and long-term partnerships rather than “debt-to-equity” solutions in crisis situations.

AkquiVest GmbH as the investment and portfolio advisor to the AkquiVest fund, Luxembourg, is a financial services company as defined in Section 32 (1) of the German Banking Act and subject to ongoing supervision by the German Federal Financial Supervisory Authority (BaFin) and the Deutsche Bundesbank.