At Long Last—BaFin Issues New Guidance to German Pension Funds on Eligibility of Investment Products

15 December 2017
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Key takeaways

  • On 12 December 2017, the German Federal Financial Authority (“BaFin”) issued a long-awaited Circular providing guidance on the conditions under which German pension funds and small insurance companies may invest in financial products.
  • While the Circular includes some improvements and clarifications for investors in private equity funds, it does not include any new guidance regarding debt funds and real estate funds.
  • Borrowing at the private equity fund level is now permitted to the extent it has the purpose of bridging capital calls.
  • The new Circular explicitly allows German open-ended special funds to invest in closed-ended private equity funds that comply with the Investment Ordinance.