Before the federal government's investment summit, the chairman of Warburg Pincus warns of political chaos in Germany - and calls for more courage from managers in the fight for democracy.
René Obermann: Mutual trust and planning security as a prerequisite for investments.
Frankfurt. Mr. Obermann, the federal government's major investment summit will take place on October 20th, which is intended to attract more foreign capital to the country. Do such events actually achieve something, or is it just symbolic politics?
We urgently need foreign capital in Germany and Europe, both for growth through innovation and for the upcoming transformations. In this respect, it is important that the federal government sets an example and seeks exchange with investors from abroad.
What do you expect from the summit? What would have to happen at the end for it to be considered a success?
I think it is important that politics and business listen to each other better. Politicians have great concerns about the practices of, for example, private equity investors - after all, the conditions here are those of the social market economy, not those of the Anglo-American region. Conversely, investors must also be able to express their concerns. This must result in a dialogue and short paths for future coordination. Investments will flow to a much greater extent if there is more mutual trust and planning security.
That sounds more like an exchange of opinions than a promise of billions. Is that enough?
That would be a lot to gain.
French President Emmanuel Macron seems to be a little more ambitious. At his “Choose France” summit – now the ninth – a few weeks ago, he collected concrete investment commitments, including a $75 billion project from the tech investor Softbank. Don't Finance Minister Lars Klingbeil and Chancellor Friedrich Merz need similar success stories?
It's hard to imagine that such a summit would prompt companies to spontaneously throw billions into the balance. I rather believe that this can generate attention and improve the general conditions. I don't think much of pure announcement events, but I do think a lot of intensive exchanges on factual issues. Regulatory policy and regulation must be sensible and take the various interests into account.
Year after year, EY consultants measure how attractive Europe's countries are for foreign investments. France is ahead in the EY Attractiveness Barometer for the seventh time, Germany in third place. What do the French do better?
President Macron tried to create attractive investment conditions early on, for example when it comes to tax incentives for venture capital or employee share ownership - something Germany has struggled with for a long time. As a person, Macron is also an attractor for the younger, entrepreneurial generation.
But Germany is quickly catching up. We're starting up more companies again and with bigger ideas! Just three examples: Proxima Fusion in the field of nuclear fusion, the space company Isar Aerospace or the AI company Langdock. We don't have to hide as a location at all. By the way, foreign investors look at Germany much more positively than we do, at least so far.
If the location is so attractive, are we pursuing the reform debate too doggedly?
No. Germany is a strong country with a robust industrial base and high potential, but also a country in great need of reform - in social security systems, in the labor market, which is too rigid for the future of work using modern technologies, in administration, in energy and also in infrastructure for AI, transport and logistics. The railway is just one example of how citizens experience the state as increasingly dysfunctional. So we need reforms at all levels and at the same time international exchange and trade. Under no circumstances should we isolate ourselves in a protectionist manner!
Let's stay with the labor market for a moment: Does that mean you are calling for more flexible working hours and relaxed protection against dismissal?
Yes. But not to worsen people's conditions or take jobs away from them, but to create flexibility and opportunities. Companies in this country are hesitant to hire because they know that they will come under pressure to adapt. They would then not be able to react flexibly to market and technology changes - so they would become less competitive and in the end all jobs might be lost. At the same time, due to the rapid developments in AI and automation, we need a new pact between business and politics to prepare companies and their people for this new world of work.
What would be the key points for this pact?
For example, targeted tax support for AI training and related development measures for employees. There are good offers and promotion of such training from employers so that they can practice dealing with AI, which is finding its way into every area. To do this, we need the necessary AI infrastructure in Germany: affordable computing capacity, access to the leading models, security standards. Last but not least, trust-building joint communication on the future of work.
You previously emphasized the importance of reliability and planning security for investors. How does Germany perform here?
Apart from the repeated unfounded propaganda against private investors, for example in the healthcare sector, Germany still has some catching up to do overall. Our own experience also shows this.
They are probably alluding to the takeover of the software company PSI. The Federal Ministry of Economics initiated an investment review process in January because PSI, as the European market leader in network control systems for electricity and gas, is classified as critical infrastructure. How was your experience?
It is to be welcomed that the Ministry of Economic Affairs is now presenting an investment review law. A law is better than political arbitrariness; the rules must be the same for everyone. Our experience with the Ministry of Economic Affairs in this case was really good; they worked very professionally, objectively and quickly. Otherwise, however, it could be improved.
Where exactly do you see deficits?
There were unfounded concerns from other ministries. This also applied to factually unfounded, rather blatant statements made by individual politicians. This dragged out the process. Particularly noteworthy: Customers of the affected company were apparently also approached directly by ministries, which caused considerable and unnecessary, potentially harmful uncertainty. Such experiences are not exactly beneficial for Germany as an investment location.
Do such procedures deter foreign investors?
It is crucial that the test procedures are carried out according to clear, non-arbitrary criteria and within a foreseeable time frame. That’s what the new bill now seems to address.
Does political stability in Germany play a role for investors – keyword: rise of the AfD, election victory of the Left in Berlin, threat to the government coalition at the federal level?
Yes, of course. Concern for political stability is increasingly becoming an issue for managers, supervisory boards and investors. Compared to other European countries, we are still doing quite well, but a rules-based order, democracy and freedom are our greatest assets - we must all work for that.
Many managers find it difficult to make statements about politics. Is this caution a problem in the current situation?
Partially yes. It's not about giving employees voting recommendations - democracy thrives on the individual's freedom of choice. But discussion and dialogue, including what a social market economy means, what importance international free trade has for the company, and what role Europe's internal market plays, is something that employees value. Confidence in the market economy has declined, perhaps because we in the economy have made the mistake of not becoming more publicly committed to it. Now the supposed saviors from the far right and left are explaining how easy prosperity can be had if you just follow them.
What consequences can this have?
Political stability has long since become a location factor, and here too, Germany now lives from substance. My concern is the division in society caused by those who stir up xenophobia, trivialize Russia's aggression or use the term “rental mafia” to incite against housing companies. If the political discourse becomes more brutal, it will also cause considerable damage to the business location.
Another issue that is close to your heart is strengthening European defense. You are co-author of the “Sparta 2.0” studies, which make suggestions on how to improve Europe’s military sovereignty. Does the topic also play a role for you as an investor?
Yes, absolutely. Many innovative defense companies and suppliers that are less in the spotlight have investment problems because they lack planning security for reserve capacity, for example, or because the cycles from development to cash are very long. These often highly specialized companies need financial stamina, also because the Bundeswehr still takes a long time to award contracts despite improvements. Such investments make social sense and can at the same time bring returns that are commensurate with the risk.
Is this why Warburg Pincus is interested in the German-French arms company KNDS?
I can't say anything about the specific company. Basically, I am convinced that companies develop better when the state has as little influence on them as possible. I myself have been involved in the modernization of former state-owned companies. My experience: The state is not a good entrepreneur.
Company sales have been stalling for several years, and at the same time the valuations of portfolio companies are coming under pressure. Given this background, how do you assess the current environment for private equity?
The market has actually become more difficult. The economy is growing slowly and interest rates have risen. This makes investments more expensive and makes exits more difficult. However, there are potential buyers for well-positioned companies even in more challenging times. In the first nine months of this year, Warburg Pincus has already realized twelve billion dollars through exits worldwide - the total volume of our record year 2025. We focus on individual industries and companies where we have in-depth knowledge and which are well positioned.
At least in Europe, IPOs have fallen short of expectations. What would have to happen for the industry to get out of the weak phase?
We need a stronger European capital market. A capital markets union could ensure that more successful, fast-growing companies go public here and finance their growth. The environment is currently more difficult for tech companies: the hype is followed by concern, also because of the still high investments in AI infrastructure and the usage costs for customers. I am still optimistic in the medium and long term – AI and tech in general are strong growth drivers. However, a stable political framework is a prerequisite.
