IE Plus – BBDL launches world’s first horse fund for show events
Luxembourg’s BBDL has launched what is believed to be the first investment fund focused mainly on thoroughbred horses for show events.
The Equi Future Champions (EFC) fund is a non-Ucits onshore regulated fund, launched in Luxembourg in August.
It aims for annual net returns of at least 10%, that are not correlated to mainstream asset classes.
The revenue will come from a mixture of events prize money, proceeds of sales, and charges for breeding.
The managers BBDL S.a.r.l. Luxembourg are seeking to gather up to €250m during the six month raising period.
The SICAV-SIF is only designated for qualified investors and could be added in portfolios of institutional investors, family offices and wealthy private invidiuals.
The managers will use about 60% to 70% of fund assets to buy horses both privately and at auctions, globally.
They will invest 20% to 25% along private equity lines in companies related to the equine industry. The managers have approached some potential targets for this portion, and it is understood it will sit alongside Warren Buffett as an existing co-investor in one of these ventures.
The rest of assets will be a cash reserve for fresh purchases and extra liquidity.
Diversified wealth management group Baumann & Partners is initiator of the fund, and manager of its cash and private equity parts.
John Baumann, founder of Baumann & Partners, said the horse portion of the portfolio can be sold in a matter of days and, though private equity investments would take longer, this allowed the managers to offer at least semi-annual liquidity to investors, after an initial one-year lock on money expires.
He added: “Horses form part of a huge industry that has not been detected by the financial industry. The industry has not regarded it much, because it falls under the category ‘agriculture’. In the US last year the equine industry contributed $119bn to GDP, and provided 1.4m jobs. In Germany it provides 300,000 direct jobs and in the UK it is 5.4% of GDP.”
He said there was growing interest in show events in the Middle East, Russia and, maybe most importantly, China. “China had quarantine restrictions, but they are organizing the biggest jumping event next year in Shanghai.”
More interest probably means greater prize money. Already, the top competitions have prizes of at least CHF 500,000
(Baumann has personal experience of how lucrative equine investment can be, having bought two horses for his family and then selling one for multiples of its purchase price, and training the other for competitions.)