In this interview, Johannes Geberth, Head of Institutional Investors at Raiffeisen Bank International AG, discusses the key role of relationship banks in supporting alternative investment funds throughout their lifecycle.
1. In your opinion, what are the key factors that alternative investment funds should consider when selecting a relationship bank?
When selecting a relationship bank, alternative investment funds should consider key factors such as the bank’s industry expertise, tailored financial solutions, dedicated relationship management, flexibility, and ability to provide strategic advice and product support throughout the fund lifecycle.
2. What makes a successful relationship bank – especially for the alternative investment industry?
Relationship banks provide more than just basic banking services. Unlike transactional banks, which focus primarily on individual transactions, relationship banks prioritize building long-term partnerships with their clients. A successful relationship bank, based on my experience, is characterized by several key factors:
The first is a relationship bank’s deep understanding of its clients’ businesses and industry: understanding the business models, unique dynamics and challenges of alternative investment funds is critical to the success of the relationship. This enables the bank to offer tailored financial solutions and strategic advice that are aligned with the fund’s objectives.
The second key success factor is a dedicated and proactive relationship manager focused on long-term partnership: Professionals who develop a deep understanding of the fund industry per se, the fund’s business objectives and operational requirements, acting as the primary point of contact and coordinating with various internal teams to ensure seamless service delivery. Successful relationship banks take a proactive approach to relationship management. They anticipate their clients’ needs, identify opportunities for value creation, and offer strategic advice to help funds achieve their investment objectives. This may include identifying new financing opportunities, optimizing cash flow, or providing insights on market trends. A Relationship Bank invests time and resources in understanding their clients’ business needs, and doesn’t take an opportunistic client approach, but remains committed to supporting them throughout the entire fund lifecycle, from fundraising to exit.
The third success factor is tailored solutions: A Relationship Bank offers customized financial solutions that meet the specific needs of the funds. Whether it’s fund finance, leveraged and acquisition finance, project and structured finance, or cash management, these solutions are designed to support the fund’s investment strategy and goals.
3. Can you discuss the role of relationship banks in supporting alternative investment funds through various stages of the fund lifecycle, from fundraising to exit?
Relationship banks play a critical role in supporting alternative investment funds throughout the fund lifecycle. Here’s how they could contribute at each stage:
First, the fund setup and fundraising phase: In this phase, a relationship can already start before the actual incorporation of the fund itself – with providing initial capital accounts that the notary would need to incorporate the account. These could be set up in a quite short timeframe of two to three weeks and can of course later be used as operational account to streamline payment processes.
In case of Raiffeisen Bank International, we provide a thorough market research, particularly focused on local Central and Eastern European (CEE) markets, helping funds to assess market conditions.
Second, the deal sourcing and investment phase: There is a wide range of ways in which a relationship bank can support this phase. At fund level, this ranges from fund financing solutions, including subscription line facilities, to provide liquidity for fund investments (also possible in combination with a letter of credit), to buy-side M&A Advisory, FX hedging solutions to ESG Advisory. At the portfolio level, this could mean supporting with Leveraged and Acquisition Financing solutions, including underwriting, syndication and “bond take outs” if it come to bigger transactions.
Third, the management of the portfolio: The range of banking products at the fund level in this phase reaches again from fund financing solutions based on net asset value (NAV) to M&A Advisory. On portfolio level relationship banks offer the whole range of corporate banking products and services to portfolio companies, in our case additionally growth financing for scale-up companies. Hence RBI is in the unique position to support on all layers of the private equity/debt value chain – be it on Fund or OpCo Level.
And fourth, divestments and exits: Again, we can talk about a broad range of products from sell-side M&A advisory, to Equity Capital Markets, to Staple Financing/Refinancing.
Throughout the fund lifecycle, relationship banks act as strategic partners to alternative investment funds, providing tailored financing solutions, strategic advice, and access to specialized expertise. By supporting funds at each stage of their journey, relationship banks help them optimize performance, mitigate risks, and achieve their investment objectives effectively. In order to do so, we at Raiffeisen Bank International have set up RBI’s Fund Hub.