Martin Lee @ Sg
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DB Platinum IV Liquid Private Equity Fund

Yesterday, I was at a presentation by Deutsche Bank on one of their funds, the Liquid Private Equity Fund. This fund is a sub-fund of DB Platinum IV.

Private equity simply means the co-ownership of unlisted companies. This funding can take place at various stages of the lifecycle of the company. Typically, such an investment has a high minimum amount, long lock up period and high risks.

There are three main approaches for private equity funding:

  1. Venture Capital (young and unproven startups)
  2. Buyout (purchase or takeover of established companies)
  3. Mezzanine Financing (Investing in subordinated debt of privately owned companies)

The DB Platinum IV Liquid Private Equity Fund does not invest in private equity directly. Rather, it invests in stocks of listed companies that invests in private equity. The portfolio is selected by Vescore Solutions AG, which acts as the Asset Allocator for the fund.

The fund’s benchmark is the LPX Composite Total Return Index, which is currently one of the broadest private equity index. The fund has managed to outperform the benchmark by 5.65% since the inception on 8th March 2006.

Since the fund consists mostly of listed companies, the performance will have a positive correlation with the world equity market. The advantages of investing in the Liquid Private Equity Fund are:

  1. High liquidity and no lockup
  2. Regional diversification
  3. Diversification among the three private equity investment approaches

I suppose if you were to invest directly into a listed private equity company, you would already have some form of diversification. The fund has around 40 stocks so it provides an even greater level of diversification.

DB Platinum IV Liquid Private Equity Fund is currently available only to accredited investors.

(An accredited investor is an individual who has total net personal assets exceeding S$2 million or has an income in the preceding 12 months of not less than S$300,000. Sometimes, the ability to acquire securities of not less than S$200,000 in a single transaction can also be considered.)

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