Why are own credit funds attractive for family offices?

The market for private loans is growing dyna­mi­cally. And there is a good reason for this: attrac­tive risk/return profiles are possi­ble. With our growth fund, for exam­ple, we have gene­ra­ted an average annual return of more than 12% after costs for our inves­tors over the past four years. The money comes from entre­pre­neurs who want to diver­sify their portfolio. 

Howe­ver, we also achieve very simi­lar figu­res with our own funds for fami­lies. And to date, we have not recor­ded a single default in these funds. In addi­tion to the selec­tion, this is also prima­rily a ques­tion of the colla­te­ral concept, which is parti­cu­larly important when things go wrong. And this is where the divi­ding line runs between what fami­lies are allo­wed to do on their own and what they are not: secu­red loans require a corre­spon­ding license — in accordance with the German Banking Act or the German Invest­ment Code. The market is regu­la­ted by super­vi­sory law and requi­res licen­ses and sque­aky-clean proces­ses that meet the super­vi­sory requi­re­ments. Those who meet these requi­re­ments — for exam­ple with a credit fund — can not only grant secu­red loans, but also restruc­ture them. 

Our expe­ri­ence is very clear: those who have intel­li­gent colla­te­ra­liza­tion achieve a very good risk premium — even for compa­nies that get into diffi­cul­ties. Those without colla­te­ral often have to write off their risk capi­tal. The invest­ment oppor­tu­ni­ties start at 200,000 euros for semi-profes­sio­nal inves­tors. And if you are a wealthy family, it quickly pays to have your own fund. This can enable very flexi­ble direct invest­ments in private debt, private equity, real estate, rene­wa­ble ener­gies or infra­struc­ture. — We also have expe­ri­ence in imple­men­ting inter­na­tio­nal deve­lo­p­ment funds that are desi­gned to gene­rate posi­tive sustaina­bi­lity effects as well as returns. We adapt precis­ely to the requi­re­ments of an asset holder. In order to be able to act quickly when an oppor­tu­nity arises on the credit or equity market, indi­vi­dual fami­lies have also deci­ded to set up a low-cost reserve fund with us, for exam­ple. Of course, we can inte­grate the exis­ting value crea­tion struc­tures, for exam­ple in deal sourcing. Family offices receive an extre­mely large number of inqui­ries and invest­ment or finan­cing propo­sals. We provide support in evalua­ting these propo­sals and imple­men­ting them with a tailor-made struc­ture — provi­ded they fit the risk/return profile of the asset holder. 

The concept can be fina­li­zed in a few weeks, while the regu­la­tory imple­men­ta­tion usually takes seve­ral months. It ther­e­fore makes sense to set up such a fund at an early stage in order to be able to take advan­tage of oppor­tu­ni­ties quickly and be able to act. The term is at least five years, wher­eby income can be paid out on an ongo­ing basis. The capi­tal can also be redu­ced or increased — provi­ded the liqui­dity covers the fund’s obli­ga­ti­ons. Combi­ning the liqui­dity manage­ment of the fund with the requi­re­ments of the asset holder is one of the central design tasks in the fund concept. 

The costs of the fund itself are very mana­geable, so that a typi­cal family fund with a high service level can earn a good 11% after fund costs from a gross inte­rest rate of 12%. And our clients can expect a lot in return: We see it as our respon­si­bi­lity to gene­rate real added value — from the valua­tion of assets, the crea­tion of a colla­te­ral concept, the quality of loan agree­ments and effec­tive credit manage­ment through to report­ing. Our guiding prin­ci­ple is very simple: We only deve­lop funds in which we oursel­ves are prepared to invest. 

About the foun­ders of Credion AG

Tobias M. Weit­zel, Member of the Manage­ment Board of CREDION AG, t.weitzel@credion-ag.de

As an inves­tor and expert in corpo­rate tran­sac­tions and capi­tal market commu­ni­ca­tion, he has more than 25 years of expe­ri­ence in advi­sing natio­nal and inter­na­tio­nal corpo­ra­ti­ons, medium-sized compa­nies and finan­cial inves­tors in his areas of exper­tise. He is curr­ently Chair­man of the VERVE Group, Stock­holm, which is listed on the Nordic Nasdaq, and a member of the Advi­sory Board of ENERCAST GmbH, Kassel. 

As a former board member of the Finan­cial Experts Asso­cia­tion (FEA), the first profes­sio­nal asso­cia­tion for finan­cial experts on super­vi­sory boards, he contri­bu­ted to the “FEA Guide­lines on the Prac­tice of Dialo­gue between Inves­tors and Super­vi­sory Boards” and the “Guide­lines on Syste­ma­tic Super­vi­sory Board Appoint­ments”, among other things.

Henrik Felbier, Member of the Manage­ment Board of CREDION AG, h.felbier@credion-ag.de

As an expe­ri­en­ced restruc­tu­ring mana­ger and reor­ga­ni­zer, he has 25 years of expe­ri­ence in special and crisis situa­tions — often in a board func­tion. He is equally expe­ri­en­ced in setting up new orga­niza­ti­ons and busi­ness models. He successfully mana­ged the restruc­tu­ring and realignment of a listed, medium-sized group and as a self-admi­nis­tra­tor in accordance with Section 270 (b) of the German Insol­vency Code. 

In addi­tion, as a mana­ger in compa­nies such as Airbus Deutsch­land GmbH, Germa­ni­scher Lloyd Offshore & Indus­trial Services GmbH, Conergy Solar­mo­dule GmbH and Messe Berlin Reed GmbH, he has exten­sive expe­ri­ence in mana­ging natio­nal and inter­na­tio­nal companies.