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(Bloomberg) — Germany is preparing to launch a €100 billion ($116 billion) investment fund to help secure strategic sectors such as defense, energy and critical raw materials.
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Dubbed Deutschlandfonds — or Germany Fund — the investment vehicle will be designed to attract international investors including venture capital and family offices to multiply government resources.
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The fund will initially be backed by at least €10 billion in public money, with the aim of mobilizing up to ten times as much private capital, according to a statement to Bloomberg from the economy ministry.
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“The Germany Fund will be used to make investments in growth, innovation and competitiveness in cooperation with private German and European investors,” the ministry said in response to Bloomberg questions. “Private capital is a key lever for overcoming major economic challenges.”
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The new flagship fund is part of efforts by Chancellor Friedrich Merz’s administration to revive growth in Europe’s biggest economy after two years of contraction. The initiative also reflects heightened geopolitical risks as the German government seeks to safeguard key supply chains in response to Russia’s invasion of Ukraine, Donald Trump’s trade wars and China’s assertive foreign policy.
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The source of the government’s money for the Germany Fund is part of ongoing negotiations with the finance ministry and state-development bank KfW, the economy ministry said. It declined to comment on the structure, investment strategy and time line.
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After Merz signed off on the project and it received backing from Finance Minister Lars Klingbeil, the official start is to be kicked off in September or October after the parliament’s summer break, according to people familiar with the plan.
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An unresolved issue is whether the vehicle will be expanded to finance the development of affordable housing — a politically sensitive topic in Germany’s urban centers. The fund’s scope could be broadened once it’s up and running, said the people.
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A raw materials fund launched under former Olaf Scholz’s government is currently dormant and is expected to be folded into the new structure, the people added. It was set up to invest in crucial mineral projects in Germany and abroad.
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Energy infrastructure will likely be a core focus. Germany holds stakes in grid operators 50Hertz and TransnetBW and is considering the purchase of German assets of Dutch-owned power TenneT and parts of Dortmund-based Amprion. The goal is consolidating state control over electricity-transmission networks.
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Similar plans are being discussed in the defense industry and could also be part of the new fund. Berlin is negotiating a blocking minority stake in Franco-German arms maker KNDS and has held talks on acquiring a position in ThyssenKrupp’s submarine division. Smaller, early-stage investments in domestic defense startups are also set to be included in the fund’s portfolio.
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