German banks target debt funds

Deutsche Hypo is following rival HypoVereinsbank and preparing to launch a €500m debt fund for institutional investors. At an early stage of development, it will be Deutsche Hypo’s first vehicle.

The German bank is in talks with pension funds and smaller insurance groups, which it says have signalled healthy interest. German regulations covering KAGs, the trusted fund structure commonly used by domestic institutional investors, were relaxed recently to permit debt investing.

HVB’s subsidiary iii-Investments raised €100m in March for a debt fund and is targeting a further €150m of institutional capital. It was the first to get off the ground when it raised another €200m last December from a German pension fund for a separate debt fund.