UK hard asset investors increase ties to German-speaking Europe

Two UK investment managers have strengthened ties with German-speaking Europe, an attractive region for buying hard assets as its economies largely weather the periphery’s financial woes.

Henderson Global Investors is deploying about €130m including borrowings in Austria for special property fund Warburg-Henderson Österreich Fonds Nr 2.

Meanwhile, private equity investor Electra Partners has extended its relationship with Germany’s Steadfast Capital by investing €26m via a secondary investment in Steadfast’s second fund.

Electra has also committed itself to a founding allocation to Steadfast’s third fund, via its London-listed Electra Private Equity Plc.

Steadfast’s second product is fully invested in five positions including automotive services firm FEP, manufacturing equipment maker Kautex and promotional clothing distributor Falk & Ross.

Steadfast invests in medium-sized businesses in German-speaking markets, specialising in management buyouts of firms with enterprise values up to €150m.

This is one key focus for Electra Private Equity Plc. Electra also partners with TCR Capital in France, Sinergo SGR in Italy and N+1 in Spain.

Meanwhile, Henderson is aiming to raise €300m for Warburg-Henderson Österreich Fonds Nr 2, on behalf of its German business Warburg-Henderson KAG.

The fund will invest in 10 to 15 commercial properties in Austria including Viennese offices, aiming for capital returns of 7% per year.

It already bought a modern retail warehouse in central Vienna housing tenants including retailers KIK, Charles Vögele and NKD.

Henderson Global Investors Immobilien Austria – a joint venture between Henderson Global Investors and Vienna-based insurer Wiener Städtische Versicherung – will manage the fund’s assets.

Clemens Rumpler, Henderson’s head of property investment in Austria, said Austria’s strong economy made for a “robust” letting market, while its links to Eastern Europe were further drivers of growth for investors looking to diversify from any existing investments they made in Germany.

“Prices currently reflect very good value, particularly in the retail sector. In-house research forecasts an increase in rental values in 2011, followed by an increase in capital values in 2012,” he said.

David Walker

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