Three former private-equity industry executives, including a former Deutsche Bank AG managing director, have created a company to invest in high-yield credit funds.
Matthias Unser, Uwe Fleischhauer and Andre Hesselmann started Yielco Investments GmbH in September 2011, with the aim of raising 400 million euros ($533 million) to invest in infrastructure funds, Unser, a former managing director at Deutsche Bank AG’s DB Private Equity, said today in an interview. Yielco will also invest in so-called mezzanine funds before expanding into leveraged loans and real estate, Munich-based Unser said. None of the debt they buy will be publicly traded, he said.
“Investors are facing increasing challenges to achieve solid returns on a sustainable basis now that even government bonds are not risk-free,” Unser said. “Public investments are subject to market forces and often show price patterns that are determined more by psychological factors. This increases the volatility of institutional portfolios.”
Investors in high-yield European credit lost 2.5 percent last year, the most since 2008, according to an index tracked by Bank of America Merrill Lynch.
Yielco aims to deliver returns of between 8 percent and 10 percent through infrastructure funds, and between 11 percent and 13 percent from mezzanine funds in Europe and the U.S., Unser said. Mezzanine debt is a blend of debt and equity that tends to yield more than comparable securities because it ranks behind other obligations in the event of default.
The firm will add three to five people by the end of the year, including a partner to oversee investor relations, Unser said.
Fleischhauer ran a private-equity consultancy Fleischhauer, Hoyer & Partner from 1998 to 2011. Hesselmann was previously head of private equity for Continentale Insurance Group, which manages more than 15 billion euros.