KfW Bankengruppe and Commerzbank have established a new SME equity fund, to meet the needs of German small and medium-sized enterprises (SMEs) for a flexible, pro-business financing facility.

According to the KfW Bankengruppe, the new SME equity fund comprises a total volume of up to EUR500m and will be initially endowed with almost EUR100m by each founding partner, with the KfW share to remain under 50%.

The fund is aimed at small and medium-sized businesses in diverse sectors in Germany with an annual turnover of up to EUR500m and the equity contribution will range between EUR10m and EUR30m. It will be able to make investments as of summer 2010.

Axel Nawrath, member of the managing board in charge of domestic promotion at KfW, said: “Together with Commerzbank, we have therefore designed a new equity fund scheme that is specially tailored to the needs of SMEs and so we are setting new standards.”

Markus Beumer, member of the board of managing directors and responsible for SMEs at Commerzbank, said: “We want to supply companies with fresh equity capital to ensure sustainable growth, but the entrepreneur remains in charge. The new fund is our contribution to putting the German economy and small and medium-sized enterprises firmly on the road to recovery.”