Performance Report 2007
| Letter to investors and partners |  Tobias König Managing Partner König & Cie. GmbH & Co. KG |
Letter to investors and partners
Dear Readers and Business Partners,
Once again, we have been able to bring a business year to a successful close. The equity of€295 million which we placed in 2007 was a record. This is an amazing accomplishment bythe König & Cie. team, especially against the background of a worldwide financial crisis,which we gratefully and proudly acknowledge.
As of the end of 2007, König & Cie. had issued 69 public funds in the sectors shipping, realestate, private equity, renewable energies and secondary market life insurance. We havemade investments totalling approximately €4 billion, including the Marenave Schiffahrts AGwhich we founded in November 2006, since 1999. In 2007 alone, we introduced eleven newclosed-end funds with a total investment volume of €497.8 million on the market.
The solid reputation enjoyed by König & Cie. today is based essentially on the performanceof our funds, carefully structured and actively managed by our specialists. So it is a hardblow for us to have to report a negative result for our policy fund series »Deutsche Leben«,»Deutsche Leben II« and »Deutsche Leben III«. At the end of the past year, we determinedthat the insurance policies in the fund »Deutsche Leben« had produced lower returns thanthose shown in the prospectus. We immediately engaged an independent actuary to conducta revaluation. The results confirmed that the maturity benefits to be expected from theinsurance policies in future might also be lower than planned. This is a consequence oflower profit participations as well as lowered terminal bonuses from the insurance companies.The international financial crisis is also expected to play a role in keeping these figuresat a lower level than was usually the case in the past. In view of these circumstances, twoextraordinary shareholders' meetings resolved to sell all of the policies in the portfolios»Deutsche Leben« and »Deutsche Leben II«.
Being the owner of the company which bears my name, I felt this blow especially hard. Iwant to assure you that we will realise the best possible results for our investors and contributeto achieving these results by acting quickly, but with deliberation.
But there is also positive news for the current business year: our theme of the year is "infrastructure".Our return fund »Infrastruktur International I« has been established for the purposeof investing in outstanding infrastructure projects of various industries around theworld. We are cooperating here with General Electric and Credit Suisse, who have made itpossible for us to participate in their joint fund "Global Infrastructure Partners". Figuresfrom the International Monetary Fund indicate that growth in threshold countries and renewalrequirements in industrialised nations will create a demand for worldwide investmentsof €70 trillion by the year 2030 so that roads, railways, power and telephone networks orports and airports can be built or maintained. By carefully distributing the investments of our target funds among various economic segments and regions, we will create an extraordinarysecurity aspect as well as an opportunity for above-average success.
We have already made our initial investment by participating in "Global Infrastructure Partners"(GIP). The founding companies of GIP are the worldwide corporations General Electricand Credit Suisse; each of them has contributed US-$500 million in equity to the fund. Theinfrastructure division at General Electric is the world's leading provider of key technologiesfor industrialised, threshold and developing countries. Credit Suisse is a major Swiss bankand is one of the market leaders in investment banking for utility networks in energy andtransport. We are proud to be given the opportunity to join forces with these two top playersto drive forward large-scale infrastructure projects and to make accessible to our investorsa lucrative market segment previously available only to large investors.
Marenave Schiffahrts AG – the first "shipping trust" in Germany to be listed on the stockexchange – concluded its first year of business operations in 2007. New ships with an investmentvolume of about US-$200 million were purchased, and four construction contractsfor bulk cargo freighters for delivery beginning in 2009 were signed. The fleet iscurrently comprised of eleven units: five product/chemical tankers in the Panamax andHandymax classes, two 1,200-TEU container ships and four Supramax bulkers which will bedelivered from a Chinese shipyard beginning in 2009. During the current year, MarenaveSchiffahrts AG and our tanker fleet funds are profiting from the booming tanker markets, arecurrent confirmation of our successful employment concept in cooperation with leadingtanker shipping companies.
We wish to provide to you detailed information about our company and the performance ofour funds in the pages of this Annual Report and our Performance Record. As in the past,we have prepared market reports related to our major fields of business activities so thatyou can take a close look at the topics which are of particular interest to you. We would liketo express our thanks for your interest and loyalty and look forward to your being a part ofour activities in the future.
Tobias König