If you are looking to establish a PEF in Germany, please note that the national investment regulation has been revised to be in sync with the EU Directive. The financial supervision of PEFs in Germany is stricter than the legal regulations in other EU countries.
The institutional framework of German PEFs stipulates that the state regulates and supervises the field of investment funds, management companies manage the assets, organizations of accounting infrastructure carry out accounting and storage of assets, and also record the owners of investment shares, an independent appraiser evaluates the objects that make up the property fund, agents are involved in attracting investors.
Licensing
The management company and infrastructure organizations serving the funds operate on the basis of a license. If you want to apply for an AIFM license in Germany, please note that German funds are subject to a mandatory external evaluation prior to acquisition.
Fund management
Additional control over the activities of the management company is provided, which serves as an additional guarantee of compliance with institutional restrictions.
The fund's property is managed, taking into account institutional restrictions on the composition and structure of the fund's investment portfolio and taking into account the inflow and outflow of investors' funds.
Optimal capital structure is ensured through tranche financing and lending to PEF for qualified investors.
Corporate governance
One can easily acquire PEF assets in Germany. However, before the acquisition, the assets need to be evaluated by one or several outsourcing experts who conduct asset valuation independently of each other. The level of investor protection is increasing by insuring the risks of accounting infrastructure organizations, risks of damage and loss of property in closed PEFs.
It is not possible to create an open PEF but shares of a closed German PEF can be directly owned by professional investors. Having decided to register a German PEF, please note that there are significant legal differences between the agreement on this kind of partnership in this jurisdiction from the agreement under English law.
Like the UK and France, this jurisdiction plays an important role in the private equity market. If you want to enter the DI market in Germany, you can order a consultation on the establishment of a German PEF or advice on the regulation of private capital in Germany from our experienced specialists.
