Scalable Capital is set to revolutionise digital investing in Germany by providing access to private equity for suitable investors with help from BlackRock.
Through its investment platform, clients can now invest in privately held companies that are not listed on stock exchanges, an opportunity traditionally reserved for institutional investors.
The BlackRock Private Equity Fund, serves as the foundation of this new service, managing over $450bn in alternative assets. Investors can begin with a one-time investment of €10,000 ($10,426) and establish a savings plan.
Private equity is gaining prominence in diversified portfolios, with 88% of global companies with over $100m revenue remaining privately owned, presenting a vast investment opportunity.
Julius Weller, Vice President Broker at Scalable Capital stated: “As alternative investments such as private equity are becoming increasingly relevant for participation in economic growth, we now make them accessible to our investors. With the expansion of our investment platform to include this segment, clients gain access to the high return potential of private companies. We also achieve the favourable terms and simple handling for private equity that Scalable Capital is known for.”
Over the past two decades, Europe’s publicly listed companies have declined by 23%, while private companies have grown by over 17%, with 98% of large companies remaining privately owned.
As private firms seek long-term financing without going public, private equity is becoming a preferred funding source. Private equity is gaining popularity with investments growing fourfold in the past decade, reaching $15trn in 2023 and expected to reach $29trn by 2030.
Moreover, for long-term investors, private equity offers an attractive risk-return profile. Over the past 20 years, private equity investments have delivered an annual return of 14.9% in US dollars, outperforming traditional stock market indices like the MSCI World Index.
According to BlackRock’s research, incorporating private equity into a traditional 60/40 stock-and-bond portfolio can improve its expected return from 5.5% to 7.2% over a ten-year period, with only a slight increase in risk.
This investment opportunity is designed for investors with a long-term perspective who do not require immediate liquidity. The fund allows for share redemptions only two years after launch, with subsequent redemptions available on a quarterly basis, subject to a 5% fund volume cap.
BlackRock’s Private Equity Fund, with over two decades of experience, adopts a co-investment strategy, acquiring majority stakes in private companies alongside top managers for broader diversification.
Christian Bimueller, Head of Digital Distribution Continental Europe at BlackRock shared: “We’re very excited to introduce our new Private Equity solution onto Scalable Capital’s investment platform, allowing wealth investors in Germany digital access to BlackRock’s private markets capabilities for the first time. With private companies increasingly driving economic growth, we are offering a unique opportunity for long-term investors to unlock potential returns blending with traditional public markets. By breaking down barriers to investing in private assets, we are enabling wealth investors to diversify their portfolios and access institutional-quality private market investments in a digital format.”
Scalable Capital is making private equity investing as simple and accessible as investing in traditional stocks and ETFs. The entire process is digital, eliminating the need for manual paperwork. Investors will also benefit from automatic capital gains tax offsetting and exemption order integration, just as with other securities.
To ensure suitability, Scalable Capital has implemented a fully digitalised eligibility check. A two-week revocation option for purchase orders and extensive informational resources will help investors make well-informed decisions.
Interested investors in Germany can now sign up for a waiting list to receive updates ahead of the planned April launch. Once live, the BlackRock Private Equity Fund will be available through Scalable Broker, marking a significant milestone in democratising access to private equity investments.
