Welcome to Lennertz & Co.

Lennertz & Co. is an owner-managed family office with a clear focus on the further development and value growth of its clients’ assets.

To this end, our team of more than 20 employees conducts a detailed and ongoing review of the entire family situation, taking into account the legal and tax-related framework conditions.

Our investment recommendations are fully aligned with the clients’ personal preferences. Given our complete independence, the clients are able to fully benefit from our unbiased assessment of global investment opportunities, their selection and their discreet implementation.

As an entrepreneurial family office, we appreciate our clients’ need for quick, profound and safe decisions. Lennertz & Co. has a number of licenses from BaFin (German Federal Financial Supervisory Authority - Bundesanstalt für Finanzdienstleistungsaufsicht) and is therefore subject to numerous quality and regulatory requirements of both BaFin and the Deutsche Bundesbank.

Our Services

  • Independent overall consideration of the clients’ family, business and financial situation, taking into account the legal and tax-related framework conditions
  • Advice on the strategic (long-term) and tactical (short-term) asset structuring in line with the clients’ preferences
  • Definition of a target structure of the total assets and appropriate implementation measures
  • Definition and discreet implementation of investment opportunities in line with the short-term and long-term target structure of the total assets
  • Independent assessment of investment opportunities based on our experience, external professional resources and expert opinions
  • Selection and coordination of custodian banks, asset managers and advisers based on the defined target structure of the total assets
  • Identification and implementation of direct and indirect investments in both US and European venture capital and growth funds, direct and fund investments in German and European small- and mid-cap companies as well as pre-IPO investments
  • Access to exclusive agriculture and forestry investments, infrastructure investments, and movable and property investments
  • Succession planning taking into account tax-related framework conditions
  • Introduction to asset successors
  • Creation of a family governance structure
  • Advice on and establishment of foundations, particularly charitable or family foundations
  • Execution of wills
Asset
Structuring
  • Independent overall consideration of the clients’ family, business and financial situation, taking into account the legal and tax-related framework conditions
  • Advice on the strategic (long-term) and tactical (short-term) asset structuring in line with the clients’ preferences
  • Definition of a target structure of the total assets and appropriate implementation measures
Asset Development
and Growth
  • Definition and discreet implementation of investment opportunities in line with the short-term and long-term target structure of the total assets
  • Independent assessment of investment opportunities based on our experience, external professional resources and expert opinions
  • Selection and coordination of custodian banks, asset managers and advisers based on the defined target structure of the total assets
  • Identification and implementation of direct and indirect investments in both US and European venture capital and growth funds, direct and fund investments in German and European small- and mid-cap companies as well as pre-IPO investments
  • Access to exclusive agriculture and forestry investments, infrastructure investments, and movable and property investments
Asset Transition
  • Succession planning taking into account tax-related framework conditions
  • Introduction to asset successors
  • Creation of a family governance structure
  • Advice on and establishment of foundations, particularly charitable or family foundations
  • Execution of wills

The Management

Philipp Lennertz

Philipp Lennertz founded Lennertz & Co. GmbH as managing partner in April 2015. Meanwhile, he now looks back on a fourteen year professional career working in the family office sector.

From 2010 to 2015, he was a member of the management of the Hamburg family office Spudy & Co. He previously worked for the Hamburg-based family office UBS Sauerborn. During this time, he has been able to gain valuable international experience working in New York, Hong Kong and Singapore.

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Oliver Piworus

Oliver Piworus joined Lennertz & Co. GmbH as a managing partner in May 2015. He looks back on a 28-year professional career working in the family office and banking sectors.

Before joining Lennertz & Co., he worked for the Hamburg-based family office Spudy & Co. from 2011 to 2015. He previously worked as deputy branch manager of the Hamburg branch of Vontobel Europe AG. His earlier professional career included positions at Dresdner Bank Lateinamerika AG, UBS Deutschland AG and the Hamburg-based family office UBS Sauerborn.

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Presse

FAZ
(12/2020)

Discussion about Real Asset Funds

Five years ago, the ELTIF was intended to allow private investors to make investments in illiquid assets. Now a reform is being discussed and argued about.

mho. FRANKFURT. Closed-end real asset funds were once popular with private investors in Germany. However, due to high costs and a lack of transparency, they fell into disrepute and have lost importance. Because Europe also lacked products that combined long-term asset accumulation and the financing of long-term growth projects, the European Union launched the "European Long-Term Investment Fund" (ELTIF) in 2015 as a direct-investing real asset fund, primarily for private and smaller institutional investors. In October, however, the Commission began a consultation process on the reform, not least because people are dissatisfied with its success. So far, only 28 funds have been launched across Europe, managing a total of less than two billion euros.

The suggestions for improvement made so far are primarily directed against rigid requirements. For example, there is a call for no longer specifying a term or being able to buy and sell shares on a continuous basis. There are also calls for more than 30 percent to be allowed to be invested in funds, including equity funds, and for fund of funds structures to be permitted. "A fund of funds offers greater diversification and is also more cost-effective in its conventional form," says Philipp Lennertz, founder of the Hamburg-based multi-family office Lennertz & Co. Due to the restrictions of the ELTIF, there is a danger, especially in the private equity sector, that "only the leftovers" are put into an ELTIF.

Much Praise from Providers

On the other hand, the ELTIF providers seem satisfied with the concept. "We were one of the first managers to come to market with an ELTIF vehicle, and we consider it a success," says Torben Ronberg, portfolio manager at Muzinich & Co. Benjamin Fischer, responsible for partnerships in the private investor business at Blackrock in Germany, adds: "For us, the ELTIF is a success story that we want to continue in the future." Commerz Real, which is responsible for real asset investments within the Commerzbank Group, also launched an ELTIF in the fall. The "Klimavest" [a portmanteau for "climate investment"] is intended to make a positive contribution (impact) to the transition to a low-carbon economy, primarily through investments in the field of renewable energies. "The ELTIF is the right approach for a real asset fund," says CEO Johannes Anschott, singing its praises. "Under German law, no impact real asset fund is currently possible as an open-end vehicle. The ELTIF sets the highest standards, not only in investor protection, compared to the former world of closed-end funds, from which we exited at an early stage. Private investors regularly don't want that kind of thing anymore."

What is an ELTIF?

A European Long-Term Investment Fund, or ELTIF, is designed to enable small investors to invest in illiquid assets. The statutory minimum investment is 10,000 euros. Investors with financial assets of less than 500,000 euros may invest a maximum of 10 percent of their financial assets in an ELTIF. The fund must have a defined maturity date. At least 70 percent must be invested in eligible assets: Corporate equity investments or loans, long-term securities, or shares in ELTIFs and similar funds (EuSEF and EuVECA). Borrowing is limited to 30 percent of the fund's volume. The shares are recorded in a securities account. Assessments are made on a quarterly basis. mho.

Nevertheless, the providers have a few suggestions for improvement. "In our view, some investment restrictions in the fund's regulation should be changed," Ronberg says. This facilitates targeting returns that could provide a sufficient premium for the closed format, he said. He is not the only one to advocate, for example, for allowing more loans secured by investment properties to be taken out, but above all for more commitment: "In our view, the promotion of the ELTIF vehicle should be strengthened and supported in line with the way UCITS vehicles are supported by the regulatory authorities." Small things can be adjusted, Anschott also says. The minimum limit of ten million euros for an asset "can be developed;" in addition, the limit of financial assets and the minimum investment of 10,000 euros are rather narrow. "The basic idea of a fund is to enable people of average wealth to participate in assets that would otherwise remain inaccessible to them," the Commerz Real CEO explains.

Markus Pimpl, responsible for the ELTIF at the Swiss Partners Group and specialist for illiquid investments, is more straightforward. The company is one of the ELTIF pioneers. "The basic idea is top notch," he says. "The rules make sense and should remain implemented." Of course, things could be improved; for example, he believes that the "social compatibility" requirement for real estate is too vaguely formulated, and the preferential tax treatment of country-specific vehicles in some member states is disadvantageous for the ELTIF. But more than reform, he says, patience is needed. Initially, the product also required explanation in sales. That has changed, he explains, because interest has grown so that sometimes it no longer seems to be a question of what, but only of how and how quickly. Fischer also confirms this: "We see that in the German market, demand for private market investments in the form of the ELTIF is growing strongly. Infrastructure will be the next item for us to offer in an ELTIF."

Pimpl resists, above all, attempts to water down the product. "There are some requirements to launch an ELTIF. After all, the product didn't fail just because some can't make it work in their favor. There is a question, however, about the extent to which you dilute the main goal of investor protection when some who have raised only liquid funds for decades and are now opening up to the idea want to influence regulation in their favor." Pimpl rejects fund of funds structures, for example: "The Commission wanted full fee transparency throughout the life of the product because it is an illiquid product. This is absolutely legitimate; the customer should know that. But with a fund of funds, no matter how good, the fee level is unclear at launch, and the additional fee layer depresses returns." However, a fund of funds is easier to manage and quicker to set up than an ELTIF. Still, the trend is moving away from that, even in the private equity sector.

Illiquid Assets as a Core Feature

The fact that ELTIFs initially had high minimum investment amounts was due to the fact that wealthier customers generally had a better understanding of a sophisticated product. These investors did not necessarily need an ELTIF either. Lennertz goes one step further. "The traditional private equity investor doesn't want such strict asset mix rules. Successful private equity funds don't need a new vehicle either." But investors with fewer assets do; Ronberg agrees: "A key differentiator of ELTIFs is that they provide access to asset classes that historically have not been available to a broader investor base." The purpose of the ELTIF is to provide a regulated product for illiquid investments that protects private investors, Pimpl says. Now, he explains, we have reached the point where this is working, and a number of private-investor-friendly products are about to be launched. "Our new ELTIF has a minimum investment of 20,000 euros. And with 60 investments, it's sufficiently diversified." There is no need for liquid assets for this, as there is enough diversity in the illiquid area. In fact, liquid investments make no sense for the ELTIF.

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FAZ
(11/2020)

Record Year Appearing Possible

mho. FRANKFURT. Private equity, i.e. the large-scale direct investment in private companies, has become increasingly popular since the financial crisis. While USD 173 billion flowed into private equity funds globally in 2010, that amount has more than tripled in recent years. This is partially due to the low interest rate environment, which makes private equity more attractive to investors. “If you want to achieve higher returns than you generate with money markets alone, there is no real way to get around alternative asset classes,” says Detlef Mackewicz, Private Equity Consultant at Münchener M&P.

Private equity promises not only higher returns than standard equity investments. The so-called illiquidity premium refers to the disadvantage that you cannot sell such an investment as quickly as you can with publicly traded stocks. However, investors also enjoy greater stability in their portfolio. This is because the equity investment value is only determined on a quarterly basis and is affected less by the volatility on public stock markets. Since 2000, the share of private equity as a percentage of “public equity” in the portfolios of institutional investors has risen from 1.5 to just under 4 percent.

Private equity is frequently equated with the PE type called buy-out funds, which acquire companies in whole or in part, increasingly with the goal of raising their value by making operating improvements and selling them for a profit. Buy-out funds have typically generated annual returns of more than 10 percent over the last 30 years, but with immense fluctuations of more than 40 percentage points. Funds for equity investment capital have achieved substantially lower returns at 6.6 percent in the U.S. and only 3.6 percent in Europe.

The corona crisis has also been challenging for the private equity business. Funds have received around USD 190 billion since the middle of August, according to Pitchbook, a service provider in the sector. That is “historically strong,” if we exclude the record period from 2017 to 2019.

By no means is sentiment negative, however. “The declines of 5 to 10 percent in value that funds saw in the first quarter had been reversed by September. Some funds have even risen. So, not much has actually happened here,” says Mackewicz. Older funds have been affected more, he continues, because managers had recent experience preparing for a crisis.

Ferdinand von Sydow, Managing Director at HQ Capital, the private equity arm of the Harald Quandt Group, sees changes occurring more in the structure of the business. 60 percent of the funds have gone into existing investments and companies in the first half of the year, in the form of additional financing or add-ons. This is a very high percentage and certainly to be viewed as a reaction to Covid-19. “We have also been more active here. There is a large number of co-investment options. However, you have to pay careful attention to quality, as you do in the secondary market. But it is worthwhile checking whether such an add-on, which looked even more expensive eight or ten months ago, has become more attractive.

New business has slowed substantially in the meantime. In part, that is because meetings to get acquainted and the due diligence for acquisitions are not possible on site or only possible with great difficulty. The effect of the strict restrictions on personal contact, which is very important in the sector, can be seen most clearly in sales, says Mackewicz. The number of so-called exits has dropped from 2,212 in 2019 to just 776 in the current year – just above the number in 2009, according to Pitchbook. No investor wants to sell at a discount, so they limit themselves to waiting and portfolio management before hard decisions have to be made, according to the analysts at Pitchbook. Philipp Lennertz, founder of the Hamburg multi-family office Lennertz & Co., views this more pragmatically. Fund managers simply have a lot of challenges with the companies, as far as he sees it, whether they are suffering from the crisis or profiting from it on a large scale.

New fund providers are also having a difficult time. “Like many others, we as investors are also relying more on established business relationships and are concentrating on trusted partners. Preference is given above all to managers who have already handled crises well. Investors currently view the private equity sector as strong, adaptable and flexible. Naturally, it is difficult for new players to provide evidence of this.”

One thing is not lacking in the sector: money. Pension funds and church institutions are investing less, von Sydow says, probably because they have suffered in part substantial loses in income. But demand continues to be strong. “New investors now have difficulty investing in the funds of top firms because their regular investors have been adding to their investments,” says Lennertz. That leads to acquisition pressure in the sector, he continues. In this regard, 2020 was a lost year for funds that were in the investment phase at this time, according to him. “Pressure may cause decisions to be made that are not sensible,” Lennertz fears.

There are high hopes for the coming year. Lennertz, for example, believes that 2021 could be a new record year, while von Sydow prefers a wait-and-see attitude at the present time. The greatest opportunities are seen in digitization. All observers believe that accumulated, uninvested funds or “dry powder,” will flow into this sector. It is a trend that began some time ago and has accelerated as a result of the pandemic – almost too much, says Lennertz. There will still be some difficulties, say the experts. “Only when the tide goes out do you discover who's been swimming naked,” says Mackewicz, quoting Warren Buffet. “Then it will become evident where flaws have been covered up.” This will not be an “enormous wave” and the process will also unfold slowly after the crisis begins to recede. And isolated losses in funds will be possible to deal with due to their diversified portfolios, he explains.

“There will also be opportunities, for example in the area of restructuring,” says von Sydow. In Germany, this will start becoming an issue in April when bankruptcy filings resume again, according to Lennertz, who also foresees political support for involvement of the sector. Jim Barry views it similarly. The managing director responsible for investments at Blackrock Alternatives Investors said in regard to the elections in the United States: In comparison to what was to be expected in the case of a Democratic “blue wave,” the scope and amount of any fiscal stimulus should now be lower. “The economic consequences of the pandemic should be drawn out and result in investment opportunities with distressed assets.” Private equity always profits from price uncertainty in turbulent times, says Sydow in summing up the situation. “In a calm market with perfectly priced assets, it is difficult to find good quality at reasonable prices.” A major topic should also be sustainable investing. Only because of corona have we not reached this point already in 2020, according to von Sydow. Investors are under pressure from all sides to demonstrate a social benefit from their capital investments, he adds.

It is not easy to be a private investor in private equity. The funds of well-known private equity firms such as KKR or Blackstone require minimum investments in the double-digit millions. The sums are somewhat lower for investments with firms such as HQC or Feri Trust, which allow smaller institutional and larger private investors to participate. The hurdles are even lower for specialized investment boutiques such as Circle Eleven or fintechs. The digital asset manager Liqid offers closed-end umbrella funds; and the fintech Moonfare facilitates so-called fractional investments in individual large funds. In the meantime, the minimum investment sum here is a six-digit figure. With a lower limit of 50,000, this makes a fund from Schroeders almost revolutionary. The reason is in part that these funds are reserved for so-called qualified investors due to investor protection, i.e. ultimately investors with more assets.

Private equity umbrella funds with low minimum investments flourished in Germany for a while. But their benefits are disputed. Administration causes additional costs, and many of these umbrella funds have already run for a long time. This reduces returns and tends to erode the illiquidity premium. An alternative is to invest in the equities of private equity firms and publicly listed exchange traded funds (ETFs) for this. However, this is ultimately “public equity” again, which is subject to the laws of the securities markets. Furthermore, there are a handful of publicly listed investment trusts in the UK. Relative to the shares of private equity firms, these trusts offer a direct investment, but are naturally also subject to the laws of the market. For example, the price of BMO Private Equity Trust dropped 45 percent from its 20-year high as a result of the corona crisis. If you ultimately choose a real private equity instrument, you are bound to it for the long term. In the first few years, funds are successively drawn down, and only gradually do you receive returns. As a result, a private equity investment only generates noticeable yields after several years.

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Lennertz & Co. GmbH
Düsternstraße 10
20355 Hamburg
Germany

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Information according to § 5 TMG:

Lennertz & Co. GmbH
Düsternstraße 10
20355 Hamburg
Germany

Represented by:

Philipp Lennertz, Oliver Piworus

Contact:

Tel: +49 40 210 91 33-20
Fax: +49 40 210 91 33-21
Email: info@lennertz.com

Register entry:

Office: Hamburg
Register number: HRB 137568

VAT ID:

VAT Identification Number in accordance with §27a Value Added Tax Act:
DE 255 807 053

Supervisory authority:

Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht)
Marie-Curie-Str. 24-28
60439 Frankfurt

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