Frankfurt | Spudy, an established asset management company, and Moonfare, a virtual private equity platform, are teaming up to make it easier for investors to access the private equity market directly. “The partnership with Moonfare means we can manage our clients’ investments in private equity even more efficiently,” says company founder Jens Spudy.
Spudy, an asset manager from Hamburg, has 11 billion euros in assets under management. As he explains, he was persuaded by the Berlin-based fintech’s ability to leverage the advantages of digitalisation for the investment process.
Private equity funds buy companies, restructure them and take them public after three to five years, or sell them on to another financial investor or industry strategist. The top funds earn returns of up to 20 percent.
However, this asset class has a very long time horizon, with the invested capital normally tied up for up to ten years. Until now, retail investors could generally only participate in this investment type via umbrella funds. Direct access was not possible because the minimum commitment amount required was several million euros. Only institutional investors such as pension funds and insurance companies had direct access to the mega-funds.
Now Moonfare, a digital newcomer to the industry, has found a solution to this problem: the fintech collects capital from retail investors and invests it directly in funds like Carlyle, EQT and Warburg Pincus. “We chose Spudy as our partner because of their entrepreneurial mindset and pragmatic approach,” says Moonfare founder Alexander Argyros in an interview with Handelsblatt.
Argyros expects the partnership to generate an additional 30 to 50 million euros in funds annually. The minimum commitment amount is 100,000 euros. There are plans to expand the online platform to include other alternative asset classes such as infrastructure funds and real estate.
Current management fees have been lowered to 0.5 percent p.a., says Argyros, and the one-off handling fee is one percent of the managed assets.
Retail investors should not overlook the risks inherent in financial products of this kind. For instance, their investments may suffer a disproportionately large decline in value if there is a general slump in share prices.
Critics fear that, in the current boom, the prices paid by private equity funds for companies may be too high. Financial investors have recently expressed an interest in purchasing Scout24, a classifieds portal, and Osram, a lighting technology company.