Union Investment sees growth in private markets and is planning new funds

« Private markets funds are a clear growth field for Union Investment, » said Bastian Konle, who takes care of alternative products for institutional investors at Union Investment, in an interview with Bloomberg News. « There will be many opportunities for private capital in the next few years. We assume a general market growth. » The capital comes from institutional and recently also from private customers. The focus of the investments is on infrastructure and private equity.

Private market funds focus on systems that – unlike conventional shares – are not traded on a stock exchange. Investments are made, for example, in parking garages, fiber optic networks or express trains. A long binding of capital can be rewarded with an attractive return.

Union Investment has been offering such funds for institutional investors for around two decades, but it was only last year that a fund for private customers was added for the first time.

Calculate risks

« I believe that private markets investments will also gain in importance for private investors. We want to continue to grow strategically in this area, » explained Jochen Kerler, who is responsible for alternative products for private customers. The new fund for private customers invest in infrastructure and has a volume of around 170 million euros. The aim is to « expand it to » several hundred million euros « .

Growth could also bring further offers. « We are considering investing a second private markets fund for private investors. This is expected to have the focus of private equity, » explained Kerler. The risks here are higher compared to infrastructure, but the return could also be higher.

With a view to institutional customers, the private markets business of the Union Investment is significantly wider. There are currently 13 multi-investor funds that manage a total of around four billion euros-compared to 1.7 billion euros in such funds in 2020. From 2005, assets under management are grown by 18 percent per year, according to Konl.

New offers are also planned for institutional customers. For example, a fourth infrastructure fund is to start this year, for the Union Investment a volume of 250 to 300 million euros. Another fund with a focus on renewable energies is also considered.

The environment is very good for infrastructure at the moment, explained Konle. « Due to the globally increasing need for capital to finance new infrastructure and the transformation of the existing, there are a variety of exciting opportunities, » he said.

Access to potential private markets systems

Union Investment was able to raise almost a quarter of a billion euros in the last fund restart for institutional customers last year, at that time with the focus on private equity.

The company is one of the largest asset managers in Germany. Last year, Union Investment had exceeded the 500 billion euros for the first time for all products. One of the most important competitors is the decabank.

She is also active in the area of ​​private markets. For example, she has put on credit funds for institutional customers in which loans are packed that the Dekabank has previously been sufficient.

Union Investment gains access to potential private markets for their corresponding funds through several investment partners, including Mercer alternatives.

Customers in the institutional private markets area, according to Kons, primarily include primary primary banks that would draw shares in funds for their own systems. The aim is to put the investor base on a wider foundation. « In the future, we also want to gain more customers outside the cooperative sector, » said Konle.