UFG to concentrate on PE and RE arms

The Moscow-based asset management firm has agreed to sell its Russian mutual funds business to Deutsche Bank, saying the current market dislocation would help its private equity and real estate funds, which remain untouched by the deal.

UFG Asset Management is to focus on its private equity and real estate funds business after agreeing to sell its Russian mutual funds arm to Deutsche Bank for an undisclosed sum.

The German investment bank’s asset management unit today confirmed in a statement it would buy a 40 percent stake in UFG Invest, with the option to purchase 100 percent in the future.

UFG managing partner Florian Fenner however said in a separate statement the deal would not affect the Moscow-based firm’s private equity and real estate funds, adding instead that the current market dislocation would in fact provide “opportunities in the future.”

UFG launched its first real estate vehicle in July last year on $130 million and is currently raising a second fund. The firm is hoping to raise $300 million for URG Real Estate Fund II and is expected to close in November. UFG has targeted plots of land in Moscow and Russia’s larger cities, focusing on land development.

Last week, the firm said it had sold four assets from its first fund for an aggregate net internal rate of return of 71 percent. The four investments were at its industrial land development project Fyodorovskoe Industrial Park south of St. Petersburg.

UFG’s private equity fund business was launched in 2005. The firm is currently raising its second fund, Private Equity Fund II. The first fund targeted $250 million.

In today’s statement, Deutsche Bank and UFG said they would also work towards the investment bank acquiring a minority stake in UFG’s hedge fund management company, UFG Advisors.