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.