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Mezzanine capital ? a new form of fixed-income investment with regular returns and good performance prospects is catching on in Germany
German private investors have become more cautious in deciding how to invest their wealth. This comes as no surprise when you consider what investors on the equity markets have gone through in recent years. Security is uppermost in their minds at the moment. So when a single investment vehicle offers a pleasing combination of security and good performance prospects, it is bound to attract considerable interest among investors. One such form of investment is mezzanine capital. As a recent addition to the German market, mezzanine capital is attracting the attention of an ever greater number of high net worth individuals.
Mezzanine capital funds of funds offer a risk/reward profile that currently cannot be achieved with traditional investment vehicles such as equities or bonds: ¾ of the returns are made up of contractually secured interest income. On top of this, investors benefit from participating in the underlying companies? performance. In an empirical study, the Center of Private Equity Research (CEPRES), a research unit at Johann Wolfgang Goethe-University in Frankfurt, has calculated that ?Mezzanine Capital USA?, the first mezzanine capital fund of funds offered on the German market, is likely to generate a cost-adjusted return of 9.8