Alternatives in Germany – the party is on
von Britta Bene
Interest rates are down, liquidity is up, and the demand for alternative investments is everything but flat. Instead, investors are oversubscribing newly issued PE funds focused on energy and infrastructure, secondaries are in strong demand, and small- to midcap managers are finding themselves in the spotlight of many fund of fund investors. Furthermore, private debt – already an entrenched asset class in the US and UK – is finding its rhythm in continental Europe, and even hedge funds are getting more attention at the party.
These developments, alongside conspicuous interest in renewables, are driving a war for talent that is only just beginning. Within Germany, existing players are endeavouring to upgrade or grow their teams while many institutional managers (especially insurers) are responding to regulation by spinning out their alternatives units. Furthermore, a growing number of highly competitive international houses are entering the market, seeing an opportunity to tap into German investor demand. After all, it is no secret that the traditional German asset allocation mix, with its heavy weighting toward fixed income, is severely compromised going forward.
Consequently, one of the loudest calls is for professionals in sales and business development. However, long gone are the days in which a little wining and dining or a spin around the Nürburgring would suffice to secure a signing. Today, the hottest talent is highly analytical and can hold his or her own in front of an increasingly sophisticated investment committee, manager selection unit, or even single investor. “Know your market, know your product, know your client.” Being weak in even one of these elements can mean the difference between success and failure – not only on the job but for securing it as well!
However, this is merely a subset of the talent that is needed in the growing world of alternatives. There is a keen interest in experienced and client-focused structurers as well as industry experts for increasingly specialized GPs. And of course the investor side is joining the party too! Many fund selectors are averaging around 150 to 200 manager meetings per year in addition to playing their part in the asset gathering game. They too must know their market, know their product, and know their client. There is no compromise in the need to be top notch.
Thus, all in all, the party is heating up and alternatives are (thankfully) getting more attention in institutional and retail portfolios. However, good talent is hard to find, as this asset class has either been largely ignored or even vilified in the past. The result is that very few professionals in Germany can keep up with their UK or US counterparts and must up their game to stay competitive.
Working with a headhunter who employs industry veterans with the necessary product knowledge and international networks is a prudent step toward ensuring that teams are on par and ready to compete in the evolving and complex world of alternative investments.