German SME bond fund in liquidation

News  >  German SME bond fund in liquidation

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The Deutsche Mittelstandsanleihen Fonds (DMAF) has been going through the process of liquidation since June 14, 2023. Both private and institutional investors in the fund should anticipate financial losses.

The news has come as a surprise to the capital markets. The DMAF, a German SME bond fund currently valued at around 150 million euros, is in the process of being wound up. The decision to set this process in motion was taken by IP Concept, a subsidiary of DZ Privatbank in Luxembourg that manages financial investments. This will entail the sale of fund investments in SME bonds. A liquidation-induced sale of fund units means investors should expect financial losses. For this reason, they ought to take advantage of the legal options available to them in order to minimize losses to the greatest extent possible, advises commercial law firm MTR Legal Rechtsanwälte, one of whose areas of specialization is capital markets law.

The DMAF was initiated by KFM Deutsche Mittelstand AG (security identification number A1W5T2). The investment company invested predominantly in high-yield SME bonds, all the while regularly paying out dividends to investors. This makes the liquidation of the fund all the more surprising. According to KFM Deutsche Mittelstand AG and the fund’s management, neither of them were informed ahead of time about this step by IP Concept.

That being said, the fact that the fund was experiencing difficulties had become apparent from as early as the beginning of the year. Mid-January saw the issuance and redemption of shares suspended. The main reason for this is said to have been problems with the Verius bond, which is where the DMAF had invested almost four percent of its assets. The German business newspaper Handelsblatt reported on June 15, 2023, that the DMAF had also put investors’ money into other bonds that ultimately failed and yielded losses. However, the exact reasons behind the liquidation of the fund are currently unknown. IP Concept, reports Handelsblatt, informed investors that the fund was being wound up in order to protect investor interests.

Investors’ primary concern is likely to be emerging from all this as unscathed as possible. There is also the option of exploring all possible avenues for claims for compensation.

Those concerned should look no further than the capitals markets experts at MTR Legal Rechtsanwälte to review their legal options.

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