YIELCO on course for growth in the first half of 2024

Munich/Zurich/Madrid/Luxembourg
  • Capital commit­ments under management exceed the EUR 10 billion mark, Assets under Service reach EUR 10.5 billion
  • Successful closing of “YIELCO Infra­structure III” and coop­er­ation with Metzler Asset Management to launch an infra­structure fund of funds with a focus on sustain­ability
  • Attractive product range in the private equity and private debt asset classes
  • 11th YIELCO Investor Day in Munich with high response

Munich/Zurich/Madrid/Luxembourg, 26 June, 2024 — YIELCO Invest­ments Group (“YIELCO”), a specialist in private markets, looks back on a successful first half of 2024. The company has reached an important mile­stone by surpassing the signif­icant EUR 10 billion mark in assets under service. “We are delighted with the positive devel­opment of our company and the perfor­mance of our programmes. Our capital commit­ments under management have grown to EUR 10.5 billion and with the intro­duction of addi­tional programmes, the team has grown to 47 profes­sionals. This makes YIELCO one of the most active German investors in the areas of infra­structure, private debt, and private equity,” said Dr Peter Laib, Chairman of the Super­visory Board of YIELCO Invest­ments AG.

Infra­structure as an attractive asset class with high investment require­ments

In the infra­structure asset class, the multi-manager programme YIELCO Infra­structure III (“YIF III”) was success­fully closed at the end of March with a volume of approx. EUR 270 million. Both existing and new investors expressed their confi­dence in YIELCO. An increasing number of investors from abroad were also attracted, under­lining the company’s inter­na­tion­al­i­sation strategy.

The investment strategy of YIELCO Infra­structure III is based on core+ invest­ments in the small and mid-market and on broad global diver­si­fi­cation across various sectors and investment years with moderate entry valu­a­tions and debt ratios. In view of the high and growing demand for private capital to finance necessary infra­structure, the asset class offers an attractive risk/return profile. “YIELCO Infra­structure III builds on the success of its two prede­cessors. These have success­fully demon­strated the value stability, low cycli­cality and inflation protection of this strategy. Stable or rising valu­a­tions of the existing port­folios in 2022 and 2023 once again underline the stability of the asset class. With 11 invest­ments already and an attractive Core+ approach, the YIELCO Infra­structure III port­folio offers the possi­bility of double-digit returns with good investment protection,” explains Uwe Fleis­chhauer, member of the Exec­utive Board and Co-Head Infra­structure at YIELCO.

Back in May, YIELCO announced the launch of the successor fund (fourth gener­ation) in collab­o­ration with Metzler Asset Management for the second half of 2024. The fund will be clas­sified in accor­dance with Article 8 of the EU Disclosure Regu­lation. The multi-manager programme with a target capi­tal­i­sation of EUR 300 million is intended to continue the successful YIELCO investment strategy of the three prede­cessor funds for infra­structure and achieve an attractive, long-term investment return with a globally diver­sified port­folio of primary and secondary invest­ments in infra­structure target funds. A universe of around 150 under­lying infra­structure invest­ments is to be covered via at least ten fund invest­ments. Holistic ESG inte­gration with active ESG screening is imple­mented in the investment process, supple­mented by compre­hensive and trans­parent reporting.

In addition to the planned infra­structure fund of funds, the co-investment fund “YIELCO Infra­structure Oppor­tu­nities” is currently in pre-marketing (Art. 8 SFDR). The fund, with a target capi­tal­i­sation of EUR 200 million, will co-invest in future-oriented infra­structure assets in the small and mid-cap segment with a focus on Europe and the USA alongside well-known managers. Due to the capital require­ments for infra­structure invest­ments, there are many investment oppor­tu­nities in this area.

Private equity with pronounced return potential and simul­ta­neous risk limi­tation through value investing

Current industry reports, including the Bain Global Private Equity Report, emphasise the impor­tance of sustainable oper­a­tional value gener­ation as a key driver of returns. The current market envi­ronment is funda­men­tally different from that of the past decade. The prospect of “higher for longer” with regard to the interest rate envi­ronment and the limited avail­ability of debt capital are having a signif­icant impact on the private equity asset class and reduce the return prospects of buyout funds, which primarily generate their returns through financial engi­neering. YIELCO Private Equity USA III, the successful contin­u­ation of the sixth gener­ation of YIELCO private equity programmes — the third with a US focus — is posi­tioning itself in this envi­ronment by concen­trating on value investing oppor­tu­nities. The port­folio offers access to funds that are char­ac­terised by strong oper­a­tional value creation approaches with a focus on profit growth and are able to implement complex trans­ac­tions, e.g. corporate spin-offs. The programme is at an advanced stage of devel­opment with 8 capital commit­ments to under­lying funds and a pleasing perfor­mance devel­opment to date. The fund is open until the end of January 2025.

María Sanz García, member of the Exec­utive Board and Co-Head Private Equity at YIELCO, says: “The histor­i­cally important value drivers, in particular multiple expansion and the use of debt capital, are under pressure and require an adjustment of value gener­ation strategies. The current market envi­ronment poses major chal­lenges, partic­u­larly for companies with high levels of debt and low cash flow. These devel­op­ments emphasise the great impor­tance of oper­a­tional value creation expertise. The attrac­tiveness of the YIELCO value investing strategy in the private equity sector is based on entry valu­a­tions well below the market level and low debt ratios. In imple­menting this strategy, we count on managers with strong oper­a­tional skills and resources. This combi­nation makes it possible to realise a pronounced return potential regardless of market cycles while at the same time limiting risk. This differ­en­tiated investment strategy has resulted in a highly successful port­folio that has provided our investors with signif­icant liquidity over the past 18 months – a period marked by low activity in the broader buyout exit market.”

Private debt ahead of upswing, driven by tradi­tional banks’ restraint in lending and changed market condi­tions

Private debt is currently expe­ri­encing a boom as an asset class: the market volume is expected to grow from USD 1.6 trillion in assets under management (March 2023) to USD 3.5 trillion worldwide by the end of 2028[1] . The upturn is being driven by the restraint of tradi­tional banks in lending and changed market condi­tions.

Two multi-manager programmes are currently in YIELCO’s private debt product pipeline: YIELCO Senior Debt II (optionally as Ever­green) with a planned first closing in summer 2024 and a target capi­tal­i­sation of EUR 250 million by the end of 2025, and the follow-up product of YIELCO Specialty Lending, which is to be launched in the second half of 2024.

Dr Matthias Unser, member of the Exec­utive Board and Co-Head Private Debt, comments: “YIELCO’s first-gener­ation senior private debt fund of funds programme is already fully invested and is showing a pleasing and stable perfor­mance with a gross cash yield of 11% and a loss rate of just 0.5% (including unre­alised losses). The successor product in the senior debt segment is currently being launched and the first subscription deadline is planned for July 2024. Diver­si­fi­cation is provided by the specialty lending programme with a focus on non-spon­sored trans­ac­tions and asset-based loans — the current port­folio of the first fund of funds has a target return of 20% gross IRR. Here too, the second gener­ation is currently being launched.”

11th YIELCO Investor Day in Munich garners strong interest

The YIELCO Investor Day took place on 16 April at the Rosewood Hotel in Munich. More than 100 partic­i­pating investors enjoyed exciting presen­ta­tions and discus­sions with leading fund managers and investors from the private debt, private equity and infra­structure sectors. In his keynote speech, Lieu­tenant General Fred­erick Benjamin Hodges, former Commanding General of the US Army in Europe and a recog­nised expert on military and geopo­litical issues, provided fasci­nating insights into the current global situ­ation against the backdrop of increasing global crises.

About YIELCO

YIELCO Invest­ments is an inde­pendent global private markets investment specialist head­quar­tered in Germany with offices in Switzerland, Spain and Luxem­bourg. The group manages over 10 billion euros in capital commit­ments from insti­tu­tional investors and invests in the infra­structure, private debt and private equity asset classes.

Disclaimer

This is a marketing adver­tisement. The funds described in this commu­ni­cation are currently in distri­b­ution or in pre-marketing pursuant to Article 30a of EU Directive 2011/61/EU of June 8, 2011, regarding managers of alter­native investment funds and therefore subscrip­tions are not yet open. Alter­Domus Management Company S.A. has been appointed as the potential AIFM of the funds. The funds are offered only to profes­sional investors as defined in Annex II of Directive 2014/65/EU (MiFID II) and semi-profes­sional investors according to § 330 of the German Capital Investment Code (KAGB). Invest­ments in alter­native investment funds are highly illiquid and involve high risks. The targeted high returns may not be achieved. The value of an investment may both increase and decrease. There is a risk of total loss of the invested capital.

Contact for press enquiries

YIELCO Invest­ments AG
Susanne Rizzo
Phone +49 89 2323 9297–36
susanne.rizzo@yielco.com

[1] Blackrock, 2024 Private Markets Outlook, Oppor­tu­nities in mega forces, p. 10 ff.

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